LIBRARY 


UNIVERSITY  OF  CALIFORNIA. 


U'K 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/distributionofprOOat.kirich 


THE 

Distribution  of  Products 

OR 

THE  MECHANISM  AND  THE    METAPHYSICS 
OF    EXCHANGE 

three  essays 

What  Makes  the  Rate  of  Wages? 

What  is  a  Bank? 

The  Railway,  the  Farmer,  and  the  Public 


PY 


EDWARD    ATKINSON 


FIFTH  EDITION. 

'TJSI7ERSIT 


'XPOIl.^ 


G.   P.    PUTNAM'S    SONS 

NEW    YORK  LONDON 

ay   WEST  TWENTY -THIRD   STREET  24   BEDFORD   STREET,  STRAND 

Vsit  ^nicherbochrr  ^km 
1892 


^^t 


CorVRIGHT,   1885 
BY 

EDWARD  ATKINSON 


T 


Elecirotyped,  Printed,  and  Bound  by 

tlbc  Itnickerbocker  Press,  t^ew  ]t?orf{ 
C.  P.  PfTNAM's  Sons 


'^^   0?  THR 

'TJinVERSITT; 


m%t^ 


GENERAL  PREFACE. 


It  may  happen  that  one  whose  life  from  very  early  years  has 
been  of  necessity  mainly  devoted  to  active  business  and  to  prac- 
tical affairs,  will  be  found  as  well  qualified  to  treat  the  mo- 
mentous questions  which  are  the  subjects  of  the  following  essays 
as  students  or  practised  writers  whose  pursuits  are  far  removed 
from  the  actual  work  of  providing  for  the  material  wants  of  men. 
But  if  this  do  not  prove  to  be  the  case,  yet  the  business  man 
who  puts  the  results  of  his  observations  into  a  simple  form,  easy 
of  comprehension,  may  yet  aid  those  who  are  more  competent  than 
himself  in  evolving  a  knowledge  of  the  higher  laws  upon  which 
the  very  existence  of  society  depends. 

A  true  commercial  and  economic  history  of  nations,  or  even  of 
the  English-speaking  people,  remains  to  be  written.  "  How  did 
these  people  get  their  living  ?  "  is  the  question  which  every  practi- 
cal man  asks  when  reading  about  the  struggles  of  dynasties,  the 
narrative  of  wars  and  battles^  and  the  records  of  debates  of  legis- 
lative bodies,  which  constitute  the  chief  material  of  history.  Even 
when  he  reads  such  history  with  intelligent  comprehension,  he  can- 
not fail  to  observe  that  no  matter  how  each  great  struggle  has  be- 
gun^ whether  incited  by  religious  enthusiasm,  by  personal  ambi- 
tion, or  by  the  uprising  of  an  oppressed  people,  in  the  end  it  has 
almost  always  been  the  commissariat  that  has  controlled  events. 
Power  has  fallen  not  so  much  to  the  strongest  battalions  and  to 
the  heaviest  guns,  as  to  those  who  could  sustain  the  battalions 
longest,  and  support  them  with  bread  and  meat  as  well  as  with 
powder  and  iron. 

On  the  other  hand,  one  who  reads  even  the  history  of  our  own 
country  from  the  commercial  standpoint  may  well  believe  that 


fv  GENERAL  PREFACE, 

had  Adam  Smith's  "  Wealth  of  Nations  "  been  written  fifty  years 
earlier,  it  might  have  exercised  as  profound  an  effect  on  the  com- 
mercial policy  of  England  during  the  fifty  years  preceding  1776 
as  it  did  in  the  fifty  years  subsequent  to  that  date,  in  which  case 
the  colonies  of  America  might  have  separated  from  the  mother 
country  by  peaceful  methods,  and  the  War  of  the  Revolution  might 
have  been  spared. 

Only  the  present  can  be  called  a  specifically  commercial  cen- 
tury, and  one  of  its  phases  has  been  the  abuse  of  the  power  of 
credit.  Only  in  a  commercial  era  could  national  debts  have  been 
incurred  in  the  way  they  have  been  during  the  last  fifty  years,  and 
now  these  debts  threaten  the  very  existence  of  the  nations  which 
are  burthened  by  them.  Since  the  beginning  of  the  present 
century,  the  public  debt  of  Europe  has  risen  from  $2,600,000,000 
to  over  $22,000,000,000.  This  debt  has  been  accompanied  in 
many  States  by  the  issue  of  paper  substitutes  for  money,  which 
have  depreciated,  and  either  by  that  method,  or  in  some  more 
summary  way,  the  repudiation  of  a  large  part  of  it  may  become 
a  necessity  before  the  end  of  the  century. 

There  are  two  kinds  of  national  debt.  One  consists  of  debts 
imposed  upon  the  property  and  products  of  the  people  by  a  dy- 
nasty, or  by  a  privileged  class  of  legislators,  without  the  consent 
of  the  governed,  and  generally  for  the  prosecution  of  wars  by 
which  the  people  were  oppressed  rather  than  made  free.  So  long 
as  such  a  debt  exists  it  works  a  false  distribution  of  wealth  and 
of  product,  and  it  has  even  been  said  by  one  of  the  greatest  living 
statesmen  of  England,  that  her  "  national  debt  is  the  chief  cause 
of  her  pauperism." 

The  other  kind  of  national  debt  is  one  incurred  by  the  consent 
of  the  governed  for  the  purpose  of  establishing  personal  liberty 
and  equal  rights.  Such  is  our  debt.  It  will  all,  or  nearly  all,  be 
paid  within  one  generation  from  the  date  when  it  was  incurred, 
or  at  least  within  the  present  century  ;  and  it  will  have  fallen  to  a 
democratic  nation,  founded  upon  manhood  suffrage,  to  be  the  first 
among  nations  to  redeem  a  substitute  for  money,  put  into  use  as 


GENERAL   PREFACE.  V 

money  under  an  act  of  legal  tender  for  the  purpose  of  collecting 
a  forced  loan,  in  the  true  coined  money  named  in  the  promise. 
We  shall  also  be  the  first  to  pay  our  debt  without  discount  or  de- 
preciation. When  our  faith  in  democracy  fails  us,  let  us  think  of 
this  and  again  take  courage. 

But  if  I  can  add  nothing  to  the  science  of  history  by  putting 
these  practical  treatises  within  the  reach  of  students,  I  may  yet 
offer  them  to  my  business  friends  and  associates  with  the  assur- 
ance that  even  if  they  may  serve  no  other  purpose,  such  studies 
lighten  the  necessary  drudgery  of  our  daily  life,  lend  a  phase  of 
imagination  to  our  work,  bring  friends  and  sympathy  among  men 
of  science  and  literature,  and  render  life  far  better  worth  living 
than  it  would  be  if  it  could  only  be  measured  by  the  mere  dollars 
which  we  earn. 

To  the  Directors  of  the  Corporations  with  which  I  am  now  con- 
nected and  by  whom  my  own  daily  work  is  supervised  and  aided, 
I  dedicate  this  volume,  in  testimony  of  the  cordial  friendship  by 
which  business  men  may  become  united,  even  when  differing 
widely  in  their  views  upon  great  questions,  of  public  policy. 

EDWARD  ATKINSON. 
Brookline,  Oct.  4,  1884. 


WHAT   MAKES  THE   RATE  OF 
WAGES  ? 

A  TREATISE   PREPARED   BY 

EDWARD     ATKINSON 

Of  Boston,  Mass.,  U.  S.  A. 

AND    SUBMITTED    AT    THE   MEETING    OF    THE    BRITISH    ASSOCIATION    FOR    THE 

ADVANCEMENT    OF    SCIENCE,    HELD    IN   MONTREAL,    CANADA,   AUGUST 

28,    1884  ;    ALSO    PRESENTED   BY   TITLE  AT  THE   MEETING  OF 

THE  AMERICAN    SOCIAL   SCIENCE  ASSOCIATION,    HELD 

IN   SARATOGA,    SEPTEMBER,    1 884 


**  In  proportion  to  the  increase  of  capital  the  absolute  share  (of  a  givei 
product)  falling  to  capital  is  augmented,  but  the  relative  share  is  diminished 
on  the  other  hand,  the  share  falling  lo  laoor  is  increased,  both  absolutely  an< 
relatively. " — Bastiat. 


PREFACE. 


The  only  time  which  the  writer  could  devote  to  the  dic- 
tation of  this  treatise  and  to  the  computations  which  have 
been  necessary  in  its  preparation,  has  been  in  the  short  inter- 
vals of  active  business,  and  in  the  few  evenings  which  could 
be  spared  after  the  duties  of  the  day  were  over. 

The  treatise  therefore  takes  a  somewhat  unsuitable  form, 
consisting  of  introduction,  the  treatise  proper,  notes  and  ex- 
planations which  have  been  added,  and  the  various  appen- 
dices sustaining  the  main  argument, — many  of  which  ad- 
denda are  entitled  to  more  consideration  in  the  United 
States  than  they  would  have  on  the  part  of  the  British 
Association  for  the  Advancement  of  Science,  before  whom 
the  treatise  proper  was  first  read. 

If  time  sufifiiced,  all  these  detached  portions  might  well 
be  re-written  and  condensed  in  the  treatise  itself.  But  this 
is  impossible.  I  submit  the  essay  with  the  hope  that  it 
will  give  a  direction  to  a  thorough  and  complete  official 
investigation,  if  the  method  is  found  to  be  a  suitable  one  ; 
or  to  a  continuation  of  the  study  on  the  part  of  competent 
economists  who  have  more  time  than  I  have  to  devote  to 
such  work,  rather  than  with  any  expectation  of  its  being 
accepted  as  final  and  conclusive. 

All  persons  with  whom  I  have  conferred  agree  upon  the 
paramount  importance  of  the  main  question  presented. 

All  men  who  have  studied  the  phenomena  of  wages  are 
somewhat  appalled  by  the  indications  of  the  contest  which 


2  PREFACE. 

seems  to  be  approaching  in  every  civilized  state.  This 
struggle  takes  the  aspect  in  one  place  of  a  contest  between 
the  landlord  and  tenant ;  in  another  between  landowner  and 
peasant ;  in  another  between  mill-owner  and  operative  ;  in 
another  between  privileged  class  and  proletariat ;  in  another 
between  rich  and  poor;  and  in  another  between  the  needy 
and  the  well-to-do,  whether  the  latter  be  rich  or  only  well- 
off. 

These  are  all  different  phases  of  the  same  question  ;  all 
rest  for  their  conclusion  upon  the  simple  problem :  *'  What 
Makes  the  Rate  of  Wages  ? " 

Entirely  subordinate  to  these  great  divisions  between 
classes  may  be  found  the  minor  questions  of  State  inter- 
ference with  the  hours  of  labor;  State  regulation  of  the 
railway  service  ;  protection  and  free  trade  ;  usury  laws  ;  the 
employment  of  women  in  factories  ;  and  other  labor  ques- 
tions so-called.  In  this  treatise  I  have  avoided,  as  far  as 
possible,  any  reference  to  these  minor  questions  in  order 
to  keep  its  main  purpose  distinct  and  separate. 

I  trust  that  an  attempt  to  present,  if  not  to  determine,  a 
fundamental  principle  underlying  all  these  various  questions 
will  be  as  welcome  to  the  advocate  of  protection  as  it  may 
be  to  the  advocate  of  free  trade ;  as  welcome  to  the  believer 
in  cooperation,  as  it  may  be  to  one  who  trusts  in  competi- 
tion ;  as  welcome  to  the  person  to  whom  the  wrongs  of  the 
poor  seem  most  urgent,  as  it  may  be  to  the  man  of  wealtli 
who  considers  his  property  a  trust — involving  duties  as  wel! 
as  rights. 

Edward  Atkinson. 

Brookline,  Mass.,  U.  S.  A., 
September  \%,  1884. 


UFI7ERSIT7] 


INTRODUCTION. 


The  purpose  of  the  following  treatise  is  to  consider  the 
forces  to  which  both  employer  and  employed  are  subjected 
in  determining  what  rates  of  wages  can  be  paid  in  money 
and  which  control  the  bargains  made  between  them. 

It  is  not  denied  that  an  employer  who  is  in  the  possession 
of  large  capital  may  agree  to  pay  a  certain  rate  of  wages  for 
a  time,  irrespective  of  any  other  conditions  than  his  own  will. 
But  his  power  to  do  so  will  be  limited  by  the  amount  of 
capital  previously  earned  which  he  is  willing  to  spend  in 
anticipation  of  being  able  to  recover  the  sums  which  he  may 
agree  to  pay  from  the  sale  or  use  of  the  product  upon  which 
the  work  is  done.  Sooner  or  later  the  rate  of  wages  is  de- 
termined by  conditions  over  which  neither  the  employer  nor 
the  employed  have  any  control.  It  is  these  forces  which 
will  be  considered. 

The  purpose  of  this  treatise  is  to  determine  the  rate  of 
wages  expressed  in  terms  of  money.  The  distinction  must 
be  made  between  absolute  wages  and  money  wages.  Abso- 
lute wages  consist  of  the  food,  fuel,  shelter,  and  savings  if 
any,  which  are  the  true  incentive  to  work.  Money  is  merely 
the  instrument  wherewith  absolute  wages  are  obtained. 
Money  serves  to  measure  the  work  done,  provided  it  be 
true  money.  If  it  be  *'mock  money,"  as  inconvertible 
paper  money  has  been  rightly  called,  it  will  serve  to  meas- 
ure the  work  done,  and  in  addition  thereto  the  loss  suffered 
by  the  workman,  who  is  subject  to  the  risk  of  the  fluctua- 

3 


4  IN  TROD  UC  TIOX. 

tion  in  the  purchasing  power  of  the  rate  of  his  wages,  which 
always  ensues  when  inconvertible  paper  or  mock  money  is 
forced  into  use  in  place  of  true  money. 

Before  any  intelligent  consideration  can  be  given  to  the 
determination  of  what  makes  the  rate  of  wages,  an  absolute 
definition  needs  to  be  given  to  the  word  money.  One  of  the 
great  benefits  which  ensues  from  the  study  of  economic 
questions  is  this  necessity  for  the  careful  choice  of  words, 
for  accurate  definition,  and  for  precision  in  the  use  of  lan- 
guage as  an  instrument  of  thought  or  for  the  naming  oi 
things. 

The  Supreme  Court  of  the  United  States  has  lately  lent 
itself  to  the  dangerous  and  fraudulent  theory  Q>i  fiat  money 
The  Justices,  save  only  one,  have  found  in  the  sections  oi 
the  Constitution  which  give  Congress  power  to  pass  laws  tc 
enable  the  Executive  "  to  coin  money,"  or  "  to  borro\^ 
money,"  reasons  for  yielding  to  Congress  the  power  to  coii 
paper  and  to  make  it  lawful  money.  This  decision  is  great!} 
to  be  regretted.  It  is  replete  with  danger,  and  may  ye 
cause  much  disaster  to  the  people  of  the  United  States 
Upon  such  a  question  as  this,  which  is  something  more  thai 
a  mere  question  of  statute  law,  students  and  business  mei 
may  rightly  express  an  opinion,  even  if  it  is  contrary  to  th( 
dictum  of  the  Court. 

Great  judges  make  precedents,  and  do  not  blindly  follov 
them  without  consideration  of  the  fundamental  principle 
which  must  underlie  all  statutes,  if  justice  is  to  be  done  b] 
lesal  methods.  When  Mansfield  declared  that  no  slave  couh 
tread  the  soil  of  England,  all  precedents  were  against  hi 
decision.  When  Parsons  ruled  that  none  but  free  mei 
could  breathe  the  air  of  Massachusetts,  he  created  a  prece 
dent,  but  he  did  not  search  for  one.  When  Camden  rulet 
that   '*  general   warrants  "   were    inconsistent    with   Englis] 


INrRODUCTION.    ,  5 

liberty,  he  went  against  the  precedents  of  the  courts  for 
generations  before.  Yet,  in  making  these  decisions,  these 
great  judges  brought  the  law  of  the  land  to  the  high  level 
of  the  principle  of  human  freedom,  without  regard  to  prece- 
dent. What  had  not  been  law  until  they  so  decided,  be- 
came the  accepted  principle  of  law  which  no  mere  statute 
could  afterward  contravene.  Had  our  Supreme  Court  but 
sought  to  give  a  true  definition  to  the  word  inoncy^  they 
might  have  ruled  that  neither  under  the  provisions  of  the 
Constitution  for  coining  money  nor  for  borrowing  money 
could  Congress  or  Court  find  authority  for  coining  paper 
into  money  ;  or,  in  other  words,  for  attempting  to  make 
something  out  of  nothing.  Had  they  given  any  considera- 
tion to  the  question.  What  is  money  ?  they  would  not  have 
rendered  a  decision  which,  economically  considered,  is  ab- 
surd, and  by  which  they  have  substantially  declared  that  the 
promise  of  a  thing  is  the  thing  itself.  Under  this  decision 
the  people  in  this  country  have  no  rights  which  the  Supreme 
Court  is  bound  to  sustain,  if  knaves  or  fools  in  these  or  other 
times  pass  Acts  of  Congress  for  stealing  their  wages  or 
earnings  from  them  by  an  issue  of  legal-tender  fiat  money. 
There  were  many  ways  open  to  the  Court  for  sustaining 
the  legality  of  a  forced  loan,  without  debasing  the  science 
of  law  or  forcing  an  interpretation  to  the  cases  cited  in  the 
opinion,  when  these  very  cases,  if  rightly  interpreted,  are  at 
variance  with  the  decision  in  this  case.  It  may  be  true  that 
students  differ,  and  that  the  definitions  of  economists  are 
at  variance  with  each  other  upon  this  question  of  what  is 
money.  The  more  reason  for  a  Court  of  competent  juris- 
diction to  give  a  definition  consistent  with  right  and  justice, 
and  to  force  all  students  or  others  who  treat  questions  re- 
lating to  money  also  to  define  the  word  in  such  a  way  that 
the    substance    cannot   thereafter  be  confounded  "''^-h  the 


^ 


6  INTRODUCTION. 

shadow — the  thing  for  the  promise  of  the  thing  carrying  no 
obHgation  for  the  performance  of  the  promise. 

In  this  very  question — the  subject  of  this  treatise — "  What 
makes  the  rate  of  wages?"  this  recent  decision  of  the  Court 
must  be  ignored  as  if  it  had  not  been  rendered,  because  it 
vitiates  every  form  of  statement  which  can  be  submitted. 
If  the  standard  by  which  the  rate  of  wages  is  established  is 
liable  to  be  changed  at  the  instance  of  an  accidental  ma- 
jority in  any  Congress,  it  ceases  to  be  a  standard.  No 
scientific  treatment  of  this  or  of  any  of  the  great  economic 
questions  now  pending  could  be  made  consistently  with  such 
conditions  ;  nor  can  any  sound  or  permanent  conclusions  be 
reached  consistently  with  this  decision.  So  long  as  it 
stands,  all  acts  of  fiscal  legislation  will  be  of  a  purely  em- 
pirical nature.  If  the  opinion  given  by  Justice  Gray  on 
behalf  of  the  majority  of  the  Court  is  to  be  accepted, 
that  a  national  lie — a  promise  which  implies  no  obli- 
gation to  maintain  it,  is  lawful ;  in  other  words,  if  a  lie  and 
a  statute  law  can  be  consistent  with  each  other,  then  truth, 
justice,  history,  and  science  alike  reject  and  condemn  the 
opinion  by  which  such  a  conclusion  has  been  reached.  It 
would  be  out  of  place  for  an  economist  to  venture  to  com- 
ment on  the  legal  or  technical  grounds  on  which  this 
opinion  rests.  Suffice  it  that  in  three  trials  the  Court  has 
been  divided,  and  that  there  is  as  much  weight  of  authority 
on  one  side  as  on  the  other,  while  outside  the  court  it  is 
difficult  to  find  a  lawyer  of  any  high  repute  who  sustains 
the  present  decision. 

In  this  treatise  it  will  therefore  be  assumed  that  no  money 
is  entitled  to  the  name  except  standard  coin,  containing  a 
fixed  weight  of  precious  metal.  Between  two  kinds  of  coin 
there  may  be  a  distinction.  One  may  be  good  money,  the 
other  may  be  bad  money  ;  witness  our  gold  dollar  and  our 


IN  TROD  UCTION.  7 

base  silver  dollar  of  light  weight  ;  but  both  kinds  of  coin  are 
money,  while  no  kind  of  paper  promise  can  be  money. 
Paper  can  only  serve  as  a  substitute  for  money.  The  stan- 
dard by  which  we  now  work  is  the  standard  of  gold  coin  ; 
but  in  the  course  of  the  treatise,  many  variations  from  this 
standard  will  have  to  be  referred  to,  because  during  the 
period  in  which  the  country  was  subjected  to  the  depreci- 
ated greenback  currency,  the  rates  of  wages  paid  in  terms  of 
money  served  as  no  true  guide  to  the  absolute  wages  for 
which  the  work  was  done,  as  the  purchasing  power  of  this 
substitute  for  money  varied  with  its  own  fluctuations,  or  in 
the  ratio  which  it  bore  to  the  standard  of  gold  coin.  Among 
the  minor  evils  of  a  vitiated  currency  is  the  uncertainty 
which  is  imparted  to  the  statistical  statements  of  the  period 
in  which  it  is  used.  Even  a  reduction  of  the  currency 
prices  of  the  war  to  a  gold  standard  will  only  partially 
remedy  this  fault. 

I  am  well  aware  that  many  economists  of  repute  have 
adopted  such  a  definition  of  the  word  money  as  to  include 
any  instrument  of  exchange  which  may  serve  the  purpose. 
In  so  doing  it  may  perhaps  be  held  that  they  have  given 
some  foundation  for  the  charge  that  political  economy  is  not 
a  science. 

In  the  following  treatise  I  have  endeavored  to  prove  the 
paramount  importance  of  the  question  which  serves  as  its 
title.  Of  what  use  would  it  be  to  treat  the  subject  at  all, 
or  to  attempt  to  analyze  the  forces  which  make  the  rate  of 
wages,  if  there  is  no  definite  and  established  meaning  to  the 
word  money  in  which  the  wages  are  rated  ? 

Edward  Atkinson. 

Boston,  Mass.,  U.  S.  A., 
July,  1884. 


INTRODUCTION  TO  SECOND  EDITION. 


The  first  edition  of  this  treatise  was  pressed  to  comple- 
tion rather  hastily,  with  a  hope  that  it  might  have  some 
influence  on  the  legislation  of  the  present  Congress  in 
respect  to  Railroads  and  Silver  Coinage. 

A  few  errors  have  been  pointed  out  by  friendly  critics, 
mainly  owing  to  the  slightly  different  results  which  arc 
reached  in  reducing  very  large  sums  to  rates  of  earnings  per 
week  or  per  day,  without  carrying  out  the  decimals  to  such 
a  point  as  would  confuse  the  reader.  None  of  these  apparent 
errors  affected  the  conclusions,  and  they  have  been  corrected. 

But  it  will  be  observed  that  only  approximate  accuracy 
can  be  claimed  when  the  attempt  is  made  to  reduce  the  huge 
figures  of  estimated  national  production  to  the  unit  of  what 
each  person  can  enjoy  each  day. 

Suffice  it  that  even  if  the  estimate  of  annual  products  be 
varied  for  possible  error  by  ten  per  cent.,  or  $1,000,000,000 
(one  thousand  million  dollars),  the  corresponding  change  in 
the  share  which  each  person  may  enjoy  on  the  average  each 
day  would  be  only  five  cents  worth  more  or  less. 

It  has,  perhaps,  been  a  mistake,  not  to  make  a  more  com- 
plete separation  of  the  theory  of  diminishing  profits  and 
increasing  wages,  from  the  statistics  by  which  the  theory  is 
sustained ;  but  as  the  work  grew  upon  the  writer's  hands 
from  what  was  intended  to  be  a  short  essay,  suitable  for 
presentation  at  the  meeting  of  the  British  Association  for 
the  Advancement  of  Science,  into  a  treatise  of  many  pages, 
the  theory  and  its  application  became  so  interwoven  that 
the  writer  himself  could  hardly  have  separated  them  in  any 
greater  measure. 

Edward  Atkinson. 

Brookline,  Mass.,  Feb.  ig,  1885, 

8 


WHAT  MAKES  THE  RATE  OF  WAGES? 


The  phenomenal  circulation,  in  England,  of  Henry- 
George's  book,  entitled  "  Progress  and  Poverty,"  and  the 
statement  that  it  has  already  been  translated  into  every 
civilized  language  although  it  made  little  impression  in  the 
United  States,  draws  attention  to  the  fact  that  all  other 
questions  have  become  relatively  insignificant  compared  to 
the  problems  which  relate  to  the  distribution  of  wealth. 
The  premises  which  Henry  George  assumes  are  without 
substantial  foundation  in  fact  and  his  conclusions  are  there- 
fore without  warrant.  The  production  of  what  constitutes 
wealth  or  welfare  is  no  longer  at  issue.  Modern  science 
and  modern  instrumentalities  of  production  are  adequate  to 
produce  what  would  sufifice  for  a  good  subsistence  for  every 
man,  woman,  and  child  in  any  and  all  countries.  The  whole 
question  at  issue  is  the  distribution  of  this  substance  after 
it  has  been  produced.  Production  and  distribution  are  but 
two  phases  of  the  same  work. 

Land,  capital,  and  labor  are  the  three  factors  in  producr 
tion,  but  even  when  these  three  factors  are  worked  in  the 
most  hearty  co-operation,  the  world  is  always  within  a  year 
or  less  of  starvation.  The  main  question,  therefore,  is  :  How 
is  the  annual  product  distributed  ?  because  it  is  upon  the 
distribution  of  the  annual  product  that  subsistence  depends, 
rather  than  upon  the  ownership  of  land  or  of  the  products 
of  labor  which  have  been  saved  in  a  concrete  form,  and 
which  have  become  capital.      The  capital  or  labor  saved  in 

9 


lO  WHAT  MAKES 

a  concrete  form  never  exceeds  in  value  the  sum  of  two  or 
three  years  production,  even  in  the  richest  state  or  nation, 
and  is  more  apt  to  be  less  than  the  product  of  a  single  year. 

In  the  work  of  production  and  of  distribution,  by  far  the 
largest  portion  of  the  people  of  the  so-called  civilized  world 
work  for  wages  in  one  form  or  another, — that  is  to  say,  they 
are  at  any  given  time  in  the  position  of  the  employed  rather 
than  that  of  employers.  They  change  from  one  class  to  the 
other,  according  to  their  relative  abilities  or  opportunities. 
It  follows  of  necessity  that  the  paramount  question — the  one 
which  is  of  prime  importance  to  the  vast  majority  of  the 
people  of  civilized  lands,  is,  What  makes  the  rate  of  wages  ? 
because  it  is  by  means  of  the  money  which  they  receive  from 
their  employers  as  wages,  that  their  share  of  each  year's 
annual  product  is  obtained  and  is  measured.  This  being 
admitted,  the  practical  question  at  once  arises,  are  those  who 
labor  for  wages  receiving  in  each  year  a  less  and  less  pro- 
portion of  the  annual  product,  while  capitalists  are  securing 
for  themselves  a  larger  share,  or  the  reverse  ?  Are  the  rich 
growing  richer,  while  the  poor  become  poorer  ?  or,  are 
nations  themselves  becoming  poorer  as  a  whole,  rich  and 
poor  alike  securing  a  decreasing  share  of  a  decreasing  and, 
perhaps,  insufficient  product  ? 

In  treating  this  question,  two  definitions  become  neces- 
sary. What  is  production  ?  It  is  not  simply  the  primary 
process  of  bringing  forth  grain,  timber,  and  metals  in  their 
crude  form,  from  the  field,  the  forest,  or  the  mine  ;  it  is 
not  simply  carrying  these  products  through  the  mill,  the 
furnace,  or  the  forge,  into  their  secondary  form,  called  man- 
ufactures ;  but  the  word  must  include  all  that  is  indicated 
by  its  etymology — pro  duco — pro-duce-ing — leading  forth 
and  directing  the  forces  of  nature  to  the  final  use  of,  ok  con- 
sumption by,  man.    This  covers  distribution,  as  well  as  what 


THE  RATE   OF  WAGES?  II 

is  commonly  called  production.  The  word  wages  may, 
therefore,  be  defined  so  as  to  include  all  earnings  of  persons 
in  the  employment  of  others.  The  larger  part  of  the  work, 
in  many  directions,  being  done  by  the  piece,  the  wage  is  an 
uncertain  quantity,  varying  with  the  skill  and  capacity  of 
the  laborer.  In  this  treatise  the  word  wages  will  stand  for 
the  sum  of  money  which  is  earned  by  factory  operatives, 
farm  laborers,  machinists,  mechanics,  railroad  employees, 
laborers,  clerks,  salesmen  ;  in  fact,  by  each  and  every  class 
of  those  who  are  employed  by  others  in  what  is  commonly 
called  production  or  distribution  :  those  who  agree  in  ad- 
vance to  work  for  a  fixed  payment,  either  by  the  piece  or 
by  the  day,  month,  or  year. 

The  true  wage  which  the  workman  seeks  is  the  food, 
fuel,  shelter,  and  other  means  of  subsistence  with  which  the 
sum  of  his  wages  will  supply  him.  If  we  look  to  the 
derivation  of  the  word  itself,  his  wage  is  the  measure  of 
the  expectation  of  subsistence,  against  which  his  labor  is 
staked,  wagered,  or  hazarded.  It  is  not  customary  to  in- 
clude the  salaries  of  the  clerical  or  administrative  force,  nor 
the  payments  which  are  made  for  purely  mental  work  under 
this  term,  although  they  are  of  the  same  nature.  For  the 
purpose  in  hand,  we  will  limit  the  application  of  the  word 
wages  to  the  sum  of  money  earned  by  persons  who  engage 
in  the  actual  work  of  producing  or  distributing  material 
substances  ;  who  either  work  with  their  hands  or  direct  ma- 
chinery to  these  ends  ;  who  are  in  the  employment  of  other 
persons  upon  terms  stipulated  in  advance  and  who  are  sub- 
ject to  be  discharged  with  or  without  notice,  as  the  case 
may  be,  at  the  will  of  the  employer.  In  this  category  will 
be  found  by  far  the  largest  portion  of  the  people  of  this 
country  who  are  old  enough  to  become  wholly  or  in  part 
self-supporting. 


12  WHAT  MAKES 

This  great  class  consists  in  very  large  measure  of  persons 
who  depend  almost  wholly  upon  their  daily  work  for  their 
daily  bread, — whose  accumulations  are  small, — slowly  and 
painfully  made  or  saved,  and  sufficient  only  to  relieve  them 
from  the  necessity  of  work  for  the  last  few  years  of  old  age, 
if  perchance  adequate  for  that  without  the  aid  of  their  chil- 
dren. The  welfare  of  the  vast  majority  of  the  people  of 
this  country,  and  of  every  other  country,  therefore,  mainly 
depends  upon  the  adequacy  of  the  rate  of  their  wages  and 
upon  the  purchasing  power  of  the  money  in  which  their 
wages  are  paid.  It  follows  that  there  can  be  no  more  im- 
portant social  question  than  the  wage  question, — none  in 
which  error  will  be  more  fatal. 

If,  under  the  existing  conditions  of  employer  and  em- 
ployed,— of  capitalist  and  laborer, — of  wage-payer  and  wage- 
receiver, — in  other  words,  if  by  way  of  competition  the 
rich  only  grow  richer  because  the  poor  grow  poorer ; — 
if  greater  progress  under  present  laws  and  customs  is 
only  consistent  with  greater  poverty; — if  the  profits  of 
capital  can  only  be  increased  by  diminishing  the  wages 
of  labor; — if  ''wealth  accumulates  only  when  men  decay," 
— then  socialism  may  be  justified,  even  nihilism  may  be 
right ;  the  capitalist  may  be  the  enemy  of  the  laborer.  If 
such  is  the  truth,  Henry  George  only  goes  half  way  in  his 
remedy,  when  he  merely  proposes  to  nationalize  or  confis- 
cate land.  The  remedy  for  these  great  apparent  wrongs 
may,  in  such  event,  be  found  only  in  dynamite  and  the 
dagger.  If  even  the  change  in  institutions  or  in  the  title  to 
land  which  can  be  secured  by  legislation  is  insufficient,  then 
dynamite  and  the  dagger  may  be  the  only  adequate  remedy, 
as  Wendell  Phillips  hinted,  but  even  he  dared  not  say  so,  in 
his  Phi  Beta  Kappa  oration.  The  very  existence  of  modern 
society  is  the  major  issue  which  is  bound  up  in   the  simple 


THE  RATE   OF    WAGES?  1 3 

and  apparently  minor  question,  **  What  makes  the  rate  of 
wages?''  Compared  with  this  ail  problems  relating  to  the 
collection  of  revenue,  the  function  of  banks,  the  hours  of 
labor,  etc.,  sink  into  relative  insignificance.  If  the  funda- 
mental question  is.  What  makes  the  rate  of  wages  ? — these 
minor  questions  are  merely  the  froth  and  turmoil  upon  the 
surface,  which  manifest  to  the  eye  and  ear  the  great  under- 
current which  may  rend  modern  society  in  twain. 

What  are  the  facts?  Upon  the  continent  of  Europe, 
ancient  forms  of  society,  customs,  laws,  and  institutions 
of  many  kinds,  from  which  we  in  this  country  are 
substantially  free,  are  being  actually  rent  and  destroyed, 
and  the  whole  socialistic  tendency  of  legislation  at  this 
time,  in  Great  Britain,  France,  Germany,  and  elsewhere,  is 
but  an  attempt  to  solve  the  apparently  simple  question. 
What  makes  the  rate  of  wages,  or  of  the  earnings  of 
those  who  depend  upon  their  daily  work  to  meet  their 
daily  wants?  By  socialistic  tendency  is  meant  such  acts  of 
legislation  as  the  Land  Acts  relating  to  Ireland  lately 
passed  by  the  Parliament  oTf  Great  Britain  ;  the  acts  for  f 
compulsory  life  or  annuity  insurance  which  have  been  pro-V 
posed  by  Bismarck;  the  attempts  which  have  been  made  in 
France  to  own  and  control  the  whole  railway  system  and  to 
maintain  national  workshops;  and  many  other  measures  of 
like  kind  which  have  been  either  proposed  or  attempted  in 
different  parts  of  Europe.  The  issue  is  made  more  diflfi- 
cult  by  the  existence  of  conditions  in  Europe  to  which  we 
have  nothing  analogous.  The  question  there  is  not  only : 
What  makes  the  rate  of  the  wages  of  the  factory  operative, 
the  mechanic,  or  the  artisan  ?  but.  What  makes  the  rate  of 
earnings  of  the  Irish  cottier,  or  the  rack-rented  farmer,  or 
of  the  English  tenant  farmer  working  leased  land ;  or  of  the 
French  or  German  peasant  confined  tg^j^aii^taaents  which 

J^-S^       OF  THE      ^f^ 

|UNI7EEoIT7| 


14  WHAT  MAKES 

have  been  mainly  established  by  the  compulsory  division  of 
land  on  the  Continent,  and  which  have  become  so  small  by 
frequent  subdivision  that  modern  agricultural  machinery  can- 
not be  applied  to  them  in  any  great  measure  ;  on  which 
the  crops  are  therefore  made  by  the  exertion  of  the  max- 
imum amount  of  manual  labor  with  the  minimum  of 
product  per  man  ?  An  example  may  be  here  cited  of 
the  vast  difference,  in  different  places,  in  the  productive 
efificiency  of  one  man,  working  one  year.  I  cannot  give  the 
exact  measure  per  man  in  bushels  of  grain  or  barrels  of  flour 
of  foreign  agriculture,  but  the  German  or  French  peasant 
makes  but  a  very  small  crop,  who,  with  arduous  toil  with  the 
spade  and  hoe,  plants  a  little  strip  of  grain,  harvesting  it 
with  the  sickle,  and  thrashing  it  with  the  flail ;  every  one 
can  conceive  how  small  a  quantity  of  grain  must  be  the 
product  under  these  conditions,  yet  these  are  the  conditions 
under  which  a  considerable,  if  not  the  larger  portion,  of  the 
grain  crops  of  Europe  are  made. 

On  the  other  hand,  let  us  consider  an  extreme  ex- 
ample of  the  application  of  capital  to  great  areas  of  land 
in  this  country.  By  division  of  labor  and  by  the  ap- 
plication of  machinery  upon  the  great  farms  of  Dakota, 
such  enormous  abundance  is  secured  that  when  we  con- 
vert bushels  of  grain  to  the  equivalent  of  one  man's 
work,  working  300  days  in  one  year,  we  find  that  in  an 
average  year,  on  land  producing  twenty  bushels  of  wheat  to 
the  acre,  5,500  to  5,600  bushels  of  wheat  are  made  for  each 
man's  work.  Retaining  enough  for  seed,  this  quantity  suf- 
fices to  make  1,000  barrels  of  flour.  It  can  be  carried 
through  the  flour  mill  and  put  into  barrels,  including  the 
labor  of  making  the  barrel,  at  the  equivalent  of  one  other 
man's  labor  for  one  year;  and  at  the  ratio  of  the  work  done 
to  each  man  employed  upon  the  New  York  Central  Rail- 


THE  KATE   OE    WAGES? 


15 


road,  the  4,500  bushels  of  wheat  can  be  moved  from  far 
Dakota  to  a  flour  mill  in  Minnesota,  and  thence  the  1,000 
barrels  of  flour  can  be  moved  to  the  city  of  New  York,  and 
all  the  machinery  of  the  farm,  the  mill,  and  the  railroad  can 
also  be  kept  m  repair  at  the  equivalent  of  the  labor  of  two 
more  men  ;  so  that  the  modern  miracle  is,  that  1,000  bar- 
rels of  flour,  the  annual  ration  of  1,000  people,  can  be  placed 
in  the  city  of  New  York,  from  a  point  1,700  to  2,000  miles 
distant,  with  the  exertion  of  the  human  labor  equivalent  to 
that  of  only  four  men,  working  one  year  in  producing,  mill- 
ing, and  moving  the  wheat.  It  can  there  be  baked  and  dis- 
tributed by  the  work  of  three  more  persons  ;  so  that  seven 
persons  serve  one  thousand  with  bread. 

Before  we  proceed  further  in  the  consideration  of  this  and 
other  related  facts,  let  me  say  that  there  appears  to  be  an 
almost  unacknowledged  belief,  even  among  well-read  stu- 
dents, that  the  so-called  principle  which  Malthus  first  pro- 
pounded is  true  ;  or  at  least  that  it  contains  such  an  element 
of  malignant  truth,  if  one  may  use  such  an  expression, 
that  it  is  unpleasant  to  face  it,  lest  one's  faith  in  the  Power 
that  makes  for  righteousness  should  be  disturbed.  If  the 
dogma  of  Malthus  is  true,  that  population  tends  to  increase 
faster  than  the  means  of  subsistence,  there  is  no  escape 
from  the  conclusion  that  all  our  efforts  at  progress,  so-called, 
are  worse  than  useless  ;  for  instance,  when  we  attempt  to 
save  the  life  of  children  by  the  improved  sewerage  of  our 
cities  ;  when  we  provide  pure  water  and  better  dwellings 
for  the  poor,  when  we  teach  sanitary  science  to  enable  each 
and  every  member  of  the  community  to  attain  present  bet- 
ter conditions  of  comfort  and  welfare  and  a  longer  life,  we 
are  merely  building  up  our  present  prosperity  in  order  that 
the  adversity  of  a  future  day  may  affect  a  greater  number 
of  peoole.     If  population  increases  faster  than  the  means 


l6  WHAT  MAKES 

of  subsistence,  the  rate  of  wages  must  always  tend  to 
become  a  less  and  less  proportion  of  a  decreasing  product 
and  their  purchasing  power  rnust  at  last  become  so  low  as 
not  to  assure  even  the  necessary  subsistence  ;  because  there 
would  not  be  substance  enough  to  sustain  life  to  be  pur- 
chased by  any  wages  which  could  be  paid.  In  such  a  view  of 
life  all  our  humanitarian  efforts  are  criminal  if  successful, 
because  they  cause  a  more  rapid  increase  of  population  and 
only  hasten  the  evil  day  when,  in  spite  of  every  effort  or  of 
any  measure  of  intelligence,  our  mother  Earth  will  fail  to 
provide  for  the  wants  of  her  children.  They  must  then 
slay  each  other  or  die  in  myriads  by  famine  and  pestilence, 
in  order  that  only  the  fittest  may  survive.  Even  then, 
when  those  only  have  survived  for  whom  there  is  enough 
for  the  moment,  the  evil  cycle  would  begin  once  more  and 
so  go  on  forever.  It  is  upon  the  seeming  truth  which  is 
contained  in  this  abhorrent  and  atheistic  dogma  that  many 
false  theories  have  been  presented,  many  bad  acts  of  legis- 
lation have  been  justified,  and  that  it  has  become  a  wide- 
spread conviction  that  there  is  a  war,  or  constant  struggle 
and  antagonism  between  capital  and  labor, — between  rich 
and  poor.  It  seems  to  be  the  conviction  of  great  masses  of 
people  that  with  ever  increasing  wealth  there  is  and  must 
be  ever  increasing  poverty,  and  this  formula  is  working 
in  special  places  in  the  most  active  and  pernicious  manner 
at  the  present  time.  Again  we  may  ask,  what  are  the  signs 
of  the  times?  Russia  struggling  with  nihilism;  Vienna 
under  martial  law,  for  fear  of  socialism  ;  Germany  and 
Austria  dreading  what  may  come  when  Bismarck  dies  ;  the 
commune  of  Paris  kept  down  only  by  fear  and  bayonets  ; 
even  England,  gravely  disturbed  by  a  single  book  which 
attacks  her  land  system,  is  coping  with  Irish  destitution  by 
acts  of  Parliament  whicli   are   but   socialism    disguised   and 


THE  RATE  OF  WAGES?  1/ 

which  would  be  overruled,  if  enacted  by  the  Congress  of  the 
United  States,  the  moment  they  were  presented  to  the 
Supreme  Court.  These  dangers  to  the  body  politic  are 
signs  that  the  struggle  for  life  has  indeed  become  urgent 
among  great  masses  of  people  in  special  and  limited  places. 
They  indicate  that  even  in  the  present  day  the  horrors  of 
the  Reign  of  Terror  might  be  repeated  ;  that  want  is  law- 
less ;  that  hunger  and  destitution  will  incite  to  violence  in 
any  land  ;  and  they  also  prove  that  the  more  the  attempt  is 
made  to  suppress  these  dangers  by  force  of  arms,  the 
greater  the  danger  will  become.  It  would  be  as  dangerous 
to  disband  the  armies  of  Europe  as  it  is  impossible  to  sus- 
tain them,  because  the  habit  of  government  by  force  cannot 
be  overcome  except  after  many  years.  Yet,  as  I  have  said, 
in  the  world  there  is  always  enough.  Production  is  ample 
to  give  good  subsistence  to  every  man,  woman  and  child, 
especially  in  the  civilized  world,  and  the  mechanism  of  dis- 
tribution is  also  fairly  adequate.  The  whole  question  is 
one  of  the  method  of  distribution  of  each  year's  product, 
and  inasmuch  as  this  distribution  is  mainly  effected  by  way 
of  the  payment  of  wages,  the  paramount  question  is  again 
presented  : 

WHAT  MAKES  THE  RATE  OF  WAGES? 

If  we  glance  again  at  the  condition  of  tjie  nations  which 
have  been  named,  we  cannot  help  observing,  for  instance, 
that  Germany  is  poor  in  fact;  the  soil  of  large  portions  of 
her  territory  will  barely  sustain  the  people  who  dwell  thereon, 
and  although  there  has  as  yet  been  no  absolute  famine,  the 
people  of  many  parts  of  Germany  are  always  on  the  very 
edge  of  want.  We  must  therefore  explain  to  ourselves  the 
conditions  of  danger  to  which  the  best  instructed  people  ot 
Europe  have  been   brought,  by  the  consideration  of  other 


1 8  WHAT  MAKES 

matters.  The  people  of  Germany  must  be  subsisted  either 
upon  what  her  own  soil  will  produce,  or  upon  the  food  for 
which  her  own  manufactures  will  exchange.  Her  own 
annual  product,  at  its  exchangeable  value  in  money,  must  be 
the  source  of  her  own  profits,  wages,  and  taxes.  When  we 
utter  the  last  word,  may  we  not  touch  one  secret  of  her 
poverty  ?  There  are  money  taxes  and  also  blood  taxes.  One 
man  in  every  twenty  in  Germany  is  a  soldier  in  camp  or  bar- 
racks,  and  one  other  man  in  every  other  twenty  must  be  em- 
ployed in  sustaining  the  idle  soldier,  while  every  man  w^astes 
a  considerable  part  of  his  life  in  preparation  for  this  destruc- 
tive art  and  is  liable  to  be  called  away  from  productive  work 
at  a  moment's  notice.  Under  such  conditions,  before  either 
profits  or  wages  can  be  paid  to  those  who  do  the  work,  at 
least  ten  per  cent,  must  be  assigned  to  the  wasteful  and  de- 
structive although  generally  passive  war  which  is  the  condi- 
tion in  which  all  the  nations  of  Europe  now  exist. 

How  is  this  army  maintained  ?  There  is  room  enough  else- 
where, and  to  spare,  for  Germany  to  relieve  herself  of  the 
population  which  cannot  live  upon  her  soil,  except  on  the  edge 
of  starvation  ;  there  is  room  enough  even  in  our  own  land  and 
here  they  would  be  welcome.  But  every  German  boy  who 
reaches  the  age  of  eighteen  is  enrolled  for  service  in  the  army 
at  a  future  day,  and  if  he  dares  leave  the  country  after  he  is 
enrolled,  he  expatriates  himself,  renders  any  property  which 
may  be  devised  to  him  liable  to  confiscation,  and  can  never 
return,  even  though  he  may  have  become  an  American  citi- 
zen, except  at  the  risk  of  being  treated  as  a  deserter,  and 
forced  to  render  his  three  year's  service  in  camp  or  barracks. 
Under  such  conditions  as  these  it  follows  that  neither  the 
poverty  of  Germany,  France,  Austria,  Italy,  nor  any  other 
country,  can  be  attributed  to  any  real  antagonism  between 
labor  and   capital,  but   must    be   attributed  in  part  to  the 


THE   RATE  OF  WAGES?  1 9 

poverty  of  the  soil,  in  part  to  artificial  systems  in  the  division 
of  the  land  which  are  enforced  by  statute  and  in  part  to 
privileges  and  to  the  burdens  of  standing  armies  of  which  we 
have  no  counterpart.  These  dangers  to  the  body  politic  are 
but  signs  that  the  struggle  for  life  has  indeed  become  urgent 
among  masses  of  people  who  number  too  many  for  the  limited 
area  in  which  they  are,  but  where  they  are  kept  by  force,  the 
natural  law  of  distribution  by  which  they  might  spread  them- 
selves over  the  earth  being  obstructed.  Much  of  this  is 
done  under  the  pretext  that  the  right  to  property  can  only 
be  permanently  sustained  by  force,  while  the  rights  of  man 
are  denied. 

We  may  also  observe  that  almost  all  modern  dangers 
of  war  are  dangers  connected  with  the  distribution  of  wealth, 
or  from  national  jealousy  in  respect  to  commerce  which  is 
but  another  name  for  the  distribution  of  the  annual  pro- 
duct of  the  world.  This  jealousy  is  mainly  caused  by  the 
continued  prevalence  of  the  false  idea  that  in  international 
commerce  what  one  nation  gains  another  loses.  Hence 
we  find  nations  endeavoring  to  establish  and  maintain 
colonies,  in  order  to  control  their  commerce,  at  a  cost  to 
themselves  of  more  than  the  whole  commerce  is  worth. 

No  one  fights  to-day  for  a  religious  dogma,  unless  it 
be  an  Arab  or  a  Sepoy.  None  are  armed  merely  to 
maintain  a  dynasty.  It  is  the  Chancellor  rather  than 
the  Emperor  on  whose  fate  the  Empire  of  Germany 
may  depend.  The  question  as  to  who  shall  control  the 
Suez  C^nal  endangers  the  peace  of  Europe,  yet  this  canal 
is  but  a  spout  through  which  Europe  exchanges  clothing  for 
food;  it  is  a  mere  instrumentality  of  distribution.  All 
modern  questions  of  any  importance  relate  to  the  means  of 
subsistence  ;  the  distribution  of  the  means  of  subsistence  is 
finally  brought  about  by  the  payment  of  wages.     The  first 


20  •  WHAT  MAKES 

question  which  England  has  met  in  endeavoring  to  promote 
good  government  in  Egypt,  is  the  debt  incurred  by  a 
despotic  power  but  imposed  on  the  people  who  were  op- 
pressed. Whether  the  repudiation  of  such  debts  is  not 
the  first  condition  precedent  to  the  common  welfare  of 
those  upon  whom  the  debt  has  been  imposed  without  their 
consent,  is  one  of  the  many  questions  about  to  be  forced 
to  an  issue  in  other  countries  than  Egypt.  If  one  half  the 
product  of  Egypt  is  absorbed  by  the  debt,  will  the  other  half 
suffice  even  for  subsistence?  Can  the  sum  of  wages  be  more 
than  what  is  left  of  her  own  product?  Must  not  the  annual 
product  of  each  country  be  the  source  of  its  own  wages? 

As  I  have  said,  when  we  attempt  to  solve  this  question, 
we  find  that  there  need  be  no  fear  of  want  because  there  is 
not  enough  for  all.  Enough  there  is,  and  to  spare.  The 
only  question  is,  Where  is  it  ?  Distribution  is  limited  or 
restricted  in  part  only  by  want  of  proper  mechanism,  i.  e., 
by  the  lack  of  railways,  the  lack  of  ships,  and  the  like ;  in 
part  by  legal  obstruction,  in  part  by  national  jealousies,  but 
yet  more  by  obstacles  to  free  exchange,  even  where  the 
mechanism  suffices.  I  do  not  limit  the  term  free  exchange 
to  the  narrow  question  which  is  at  issue  between  the  advo- 
cates of  free  trade  and  protection  ;  that  is  a  minor  question. 
I  mean  the  obstacles  to  free  exchange  which  are  mainly 
caused  by  that  ignorance  and  incapacity  which  stands  in  the 
way  of  mutual  service,  even  among  the  people  of  the  same 
country.  The  farmer  of  our  own  land  may  have  his  barns 
running  over  with  the  abundance  of  his  product,  and  may 
desire  a  hundred  things  for  which  he  would  be  willing  to 
exchange  ;  but  if,  on  the  other  hand,  those  who  desire  to 
share  his  abundance  are  ignorant,  incapable,  or  vicious,  who 
cannot  or  will  not  work  upon  the  things  the  farmer  wants, 
there  can  be  no  mutual  service :  they  may  starve  while  his 


THE   RATE  OF  WAGES?}  21 

crops  decay.  It  is  mainly  the  imperfect  or  restricted  dis- 
tribution of  what  there  is  ready  for  use,  which  is  caused 
by  the  ignorance  or  incapacity  of  those  who  need  it,  that 
creates  want  in  the  midst  of  plenty,  not  only  in  Europe,  but 
in  the  heart  of  the  great  cities  of  our  own  land.  We  waste 
enough  in  this  country  to  support  all  our  poor  in  luxury ; 
yet  were  we  to  give  this  excess  to  them  in  mere  charity, 
what  we  waste,  thus  consumed,  would  forever  convert  the 
poor  into  paupers.  Charity  or  alms-giving  cannot  remove 
pauperism  ;  it  may  only  increase  it.  The  common  laborer, 
so  called,  is  the  one  who  suffers  most  in  times  of  depression ; 
and  he  usually  is  and  remains  a  common  laborer  merely  be- 
cause neither  his  hand  nor  his  head  have  been  trained  to- 
gether so  as  to  enable  him  to  do  work  requiring  skill,  which 
kind  of  work  is  everywhere  and  at  all  times  waiting  to  be 
done,  and  by  doing  which  he  might  become  entitled  to  a 
share  of  existing  abundance.  We  are  attempting,  in  this 
country,  to  cope  with  these  problems  by  legislative  methods. 
In  Europe  the  attempt  is  made  both  by  legislative  methods 
and  by  force  combined.  Neither  method  can  permanently 
succeed.  Neither  wealth,  welfare,  nor  common  subsistence 
can  be  permanently  imposed  from  above,  or  instituted  from 
without.  Neither  masses  of  men  nor  individual  men  can  be 
permanently  helped  who  cannot  or  will  not  help  themselves. 
The  final  remedy  for  these  wrongs  can  only  come  by  the 
development  of  individual  manhood  from  within.  Indi- 
vidual intelligence  and  integrity,  sustained  by  public  justice, 
constitute  the  sole  condition  und^r  which  permanent  pros- 
perity can  become  the  rule  among  men.  Then  life  and  lib- 
erty will  be  the  only  common  factors,  making  for  the  wel- 
fare of  each  and  all.  It  may  be  a  far-off  day,  which  none  of 
us  living  may  live  to  see,  when  this  shall  be  accomplished  ; 
but  the  potential  agency  in  promoting  this  end  is  the  ad* 
vancement  of  science. 


22  WHAT  MAKES 

With  the  chemical  or  physiological  question  which  under- 
lies the  abhorrent  dogma  of  Malthus,  I  may  not  attempt  to 
deal.  Subsistence  is  but  a  conversion  of  forces — a  chemical 
process ;  whether  or  not  the  proportion  of  force  or  energy 
which  constitutes  material  life,  and  which  takes  the  form  of 
the  body  in  which  man  lives  awhile  on  this  earth,  may  find 
a  limit  without  recourse  to  war,  pestilence,  or  famine  to 
check  its  undue  development,  is  not  yet  a  practical  question. 
When  it  arises,  it  may  be  time  enough  to  meet  it,  in  some 
far  away  period. 

The  absurdity  of  the  attempt,  as  yet,  to  measure  the 
power  of  subsistence  and  to  declare  it  to  be  limited  can  be 
demonstrated  in  two  or  three  simple  ways  suitable  to  the 
use  of  a  statistician  like  myself :  First,  no  man  yet  knows 
the  productive  capacity  of  a  single  acre  of  land  anywhere 
in  respect  to  food.  Second,  the  whole  existing  popu- 
lation of  the  globe,  estimated  at.  1,400,000,000  persons, 
could  find  comfortable  standing-room  within  the  limits  of  a 
field  ten  miles  square.  In  a  field  twenty  miles  square  they 
could  all  be  seated,  and  by  the  use  of  telephones  in  sufifi- 
cient  number  they  could  all  be  addressed  by  a  single 
speaker.  Third,  the  average  crop  of  wheat  in  the  United 
States  and  Canada  would  give  one  person  in  every  twenty 
of  the  population  of  the  globe  a  barrel  of  flour  in  each  year, 
with  enough  to  spare  for  seed  ;  the  land  capable  of  produc- 
ing wheat  is  not  occupied  to  any  thing  like  one  twentieth  of 
its  extent.  We  can  raise  grain  enough  on  a  small  part  of 
the  territory  of  the  United  States  to  feed  the  world.  The 
great  American  desert  has  gradually  disappeared.  The 
*' bad  lands"  of  Montana  prove  to  be  the  best  grazing 
ground  of  the  Northwest,  and  in  the  heart  of  the  Eastern 
States  the  mountain  section  of  the  South  waits  for  a  popu- 
lation  equal  to   that  of  Great  Britain,  who  can  there  find 


THE  RATE   OF  WAGES?  23 

potentialities  in  agriculture  or  in  mining  equal  to  those  of 
any  similar  area  on  this  or  any  other  continent.  As  yet, 
therefore,  the  doctrine  of  Malthus  has  found  only  a  limited 
application,  where  some  local  or  temporary  congestion  of 
human  force  has  gathered.  As  I  have  said,  in  the  world 
there  is  somewhere  and  always  enough.  The  only  question 
is,  Where  is  it  ?  When  found,  the  next  question  arises. 
How  to  get  it  ? 

The  first  method  which  obtained  in  the  world,  was  to 
grab  it — the  age  of  force.  The  second  method  was  to  give 
it — the  era  of  conqueror  and  conquered,  of  master  and  slave, 
of  lord  and  vassal,  of  giver  and  taker,  not  of  employer 
and  wage-earner.  The  third  method  is  to  exchange  for  it.  < 
Under  this  third  method  commerce  has  arisen,  men  have 
become  sorted  as  capitalists  and  laborers,  as  employers 
and  employed,  as  wage-payers  and  wage-receivers;  service 
for  service  is  the  common  rule  of  life;  the  exchange  of 
product  for  product  is  the  practice  of  commerce.  All 
States  have,  or  may  become  interdependent,  and  then  "  the 
ships  that  pass  between  this  land  and  that  will  be  like 
the  shuttle  of  the  loom,  weaving  the  web  of  concord  among 
the  nations."  And  again  we  meet  the  apparently  simple 
question.  What  makes  the  rate  of  wages  by  which  the 
greater  part  of  these  services  are  measured  and  under 
which  the  greater  part  of  the  distribution  is  effected  ? 

I  have  had  but  little  time  for  the  reading  of  books  or  the 
consideration  of  theories  of  wages;  biit  I  believe  we  must 
pass  from  the  English  orthodox  system  of  political  economy 
to  France,  in  order  to  find  the  first  true  statement  of  the 
relations  of  the  wage-receiver  and  the  wage-payer,  of  em- 
ployer and  employed,  of  laborer  and  capitalist,  or  of  labor 
and  capital.  Many  years  ago  a  single  phrase  in  Bastiat's 
"  Harmonies  of  Political  Economy  "  became  engraved  upon 


24  IVHAT  MAKES 

my  mind,  and  by  its  application  I  have  been  enabled  to  ob- 
serve the  phenomena  of  wages  in  the  course  of  my  business 
life  with  much  clearer  insight.  It  is  this  :  ''  In  proportion  to 
the  increase  of  capital^  the  absolute  share  of  the  total  product 
falling  to  the  capitalist  is  atigmented,  but  his  relative  share  is 
diminished ;  while  on  the  contrary,  the  share  of  the  laborer  is 
increased  both  absolutely  and  relatively y 

Among  English  writers,  Thornton  exposed  the  fallacy  of 
the  old  wage-fund  theory,  the  theory  that  all  wages  are 
paid  out  of  a  fund  of  capital  previously  accumulated  and 
will  be  high  or  low  as  the  ratio  of  that  fund  may  be  great  or 
small,  in  proportion  to  the  number  of  persons  employed. 
Professor  Cairnes  propounded  the  true  theory  of  wages  in 
one  of  his  latest  books,  in  terms  so  nearly  identical  with 
some  of  those  which  the  writer  had  used  in  this  treatise, 
that  the  writer  would  have  suspected  himself  of  unconscious 
plagiarism  had  he  not  found  his  own  records  antedating  the 
published  works  of  Professor  Cairnes  on  this  subject.  In 
this  country,  Professor  Francis  A.  Walker  has  presented  the 
true  theory  of  wages  in  the  most  effective  manner  and  has 
probably  done  more  than  any  other  writer  to  clear  the  sub- 
ject of  obscurity.  It  has  been  a  matter  of  great  satisfaction 
to  me,  that  my  practical  observations  are  so  fully  consistent 
with  the  theories  of  these  authors.  Giving  due  credit  to 
all  these  writers,  my  own  conclusions  have  been  based 
almost  wholly  upon  facts  and  deductions  from  business  ex- 
perience rather  than  from  books,  although  my  attention  was 
first  attracted  and  a  direction  was  given  to  my  observa- 
tions by  the  paragraph  which  I  have  quoted  from  Bastiat. 

The  two  forces  which  are  engaged  in  the  production  of 
the  substances  which  constitute  food,  fuel,  means  of  shelter, 
or  the  materials  which  may  be  converted  into  additional 
capital,  are  of  course,  labor  and  capital.     Land  itself  is  but 


THE  RATE   OF    WAGES?  2$ 

an  instrument,  being  useless  and  valueless  unless  labor  and 
capital  are  employed  upon  it.  By  the  co-operation  of  these 
two  forces,  an  annual  product  is  made.  The  true  function 
of  capital  is  that  of  a  force  put  to  use  in  order  to  increase  pro- 
duction, rather  than  a  substance  to  be  immediately  divided 
and  consumed. 

Fixed  capital,  so  called,  although  the  name  is  hardly  a 
suitable  one,  may  be  likened  to  the  foundation,  boiler  and 
engine,  and  quick  capital  to  the  fuel  with  which  the  boiler  is 
supplied:  the  one  is  very  slowly,  the  other  very  quickly  con- 
sumed, yet  neither  works  directly  to  the  subsistence  of  men, 
but  indirectly  both  work  to  the  vast  increase  of  the  actual 
substances  with  which  men  are  fed,  clothed,  and  sheltered  ; 
these  substances  constitute  the  annual  product  which  is 
divided  among  them.  The  term  annual  fits  the  case,  because 
the  year  represents  the  course  of  the  four  seasons  and  the 
succession  of  crops.  A  small  part  of  each  year's  annual 
product,  commonly  called  "  quick  "  or  *'  active  capital,"  must 
be  carried  over  to  start  the  next  year's  work  upon,  as  a  small 
part  of  last  year's  product  had  been  brought  over  to  start 
this  year's  work  upon  ;  one  proportion  balancing  the  other. 
The  fixed  capital  seldom  exceeds  in  value  two  year's  pro- 
duction. It  therefore  follows  that  all  profits,  all  wages,  all 
taxes,  in  fact  all  consumption  whereby  existence  is  main- 
tained, must  be  substantially  drawn  from  each  year's  product ; 
it  is  therefore  in  the  division  of  these  substances  produced 
within  the  year,  that  true  profits  and  real  wages  are  to  be 
found.  But,  in  order  that  this  product  may  be  distributed 
and  consumed,  since  no  man  lives,  economically  speaking, 
for  himself  alone,  the  various  products  of  the  year  must  all 
be  exchanged  by  purchase  and  sale,  and  therefore  must  all 
be  measured  in  and  reduced  to  terms  of  money, — except  that 
part   of  the  annual   product   which  is  consumed  upon   the 


26  WHA  T  MAKES 

farm  by  the  farmer  and  his  family  without  being  sold.  With 
this  exception,  it  therefore  follows,  that  substantially  the 
whole  product  of  each  year  must  be  converted  into  terms  of 
money.  I  think  it  escapes  common  observation,  that  in  all 
departments  of  industry,  except  agriculture,  few  men  now 
produce  any  thing  which  they  use  themselves ;  and  even 
in  farmers'  families,  domestic  consumption  is  now  limited  to 
a  small  part  of  the  farm  product,  all  else  is  procured  by  ex- 
change ;  all  men  are  interdependent.  The  sum  of  money 
represented  by  this  conversion  is  and  must  be  vastly  greater 
than  the  sum  of  real  or  actual  money  which  is  used  as  the 
instrument  of  exchange,  hence  the  necessity  for  true  money. 
The  greenback  fallacy  can  only  deceive  those  who  fail  to 
comprehend  the  function  of  money.  Inconvertible  paper 
money  is  a  fraud,  and  the  burthen  of  proof  rests  upon  its 
advocates  to  justify  the  honesty  of  their  intentions  by  the 
weakness  of  their  intellects.  In  this  process  of  conversion 
into  terms  of  money  by  way  of  purchase  and  sale,  a  part  of 
the  value  of  the  annual  product  is  sorted  on  the  one  side  as 
profit,  rent,  interest,  or  by  whatever  name  the  share  of  the 
owner  of  capital  may  be  designated  ;  and,  on  the  other  side, 
another  and  vastly  greater  part  constitutes  the  share  of  those 
who  do  the  work,  and  is  named  wages.  In  the  subdivision 
of  this  latter  share  into  individual  parts,  the  rate  of  each 
persons  wage  is  established  in  terms  of  money. 

It  would  not  be  consistent  with  the  general  purpose  of 
this  treatise  to  attempt  at  this  point  to  give  precise  details 
in  respect  to  the  value  of  the  annual  product  of  a  normal 
year  in  money.  The  general  conclusion  at  which  I  have 
arrived  is,  that  in  the  year  1880,  the  census  year,  when  the 
population  of  the  United  States  numbered  a  little  over 
50,000,000,  the  annual  product  had  a  value  of  nearly  or  quite 
$10,000,000,000  at  the  points  of  final  consumption,  includ- 


-M^        yrf.^ 


TJ/E  RATE   OF    WAGES?  27 

ing,  at  market  prices,  that  portion  which  was  consumed  upon 
the  farm  but  which  was  never  sold.  .  Omitting  that  con- 
sumed upon  the  farm,  it  was  about  $9,000,000,000.  What 
portion  of  this  product  constitutes  the  average  share  of  the 
capitalist  at  the  present  time  cannot  be  substantially  proved. 
In  a  normal  year,  under  normal  conditions  I  am  of  the  pro- 
found conviction  that  not  exceeding  ten  per  cent,  can  be 
set  aside  as  either  rent,  interest,  profit,  or  savings  ;  and  that 
nine  tenths  constitutes  the  share  of  the  laborer,  which,  by 
subdivision,  becomes  expressed  in  terms  of  personal  wages. 

During  recent  years,  the  increased  efficiency  of  the  railway 
service,  and  the  consequent  elimination  of  two  thirds  of  the 
cost  of  distributing  commodities  in  bulk,  has  undoubtedly 
augmented  for  a  time  the  amount  falling  to  the  capitalist, 
but  without  in  any  measure  reducing  the  amount  previ- 
ously falling  to  the  laborer ;  on  the  contrary,  greatly  promot- 
ing the  laborer's  interest  as  well  as  that  of  the  capitalist. 

The  great  fortunes  of  the  railway  magnates  (aside  from 
one  or  two  conspicuous  and  notorious  thieves  who  have 
stolen  franchises  and  defrauded  their  stockholders)  have 
consisted  of  but  a  small  portion  of  what  they  have  saved 
to  the  community.  The  main  work  of  railway  capitalists 
has  been  to  reduce  the  cost  of  distribution ;  their  true 
function  ought  not  to  be  prejudiced  by  the  fact  that  a  judge 
of  one  of  the  courts  of  a  neighboring  State  was  impeached 
and  disqualified  from  holding  any  office  of  trust  or  honor 
for  '^  corrupt  practices  "  with  a  notorious  railway  official. 
The  corrupt  judge  is  dead — the  corruptor  of  the  judge  still 
lives  a  base  and  dishonored  life,  probably  continuing  to 
exist  physically  because  he  is  mentally  and  morally  in- 
capable of  conceiving  the  turpitude  of  his  existence  or  of 
feeling  the  loathing  and  contempt  of  the  community.  But 
even  the  railways  which  he  has  constructed  will  continue  to 


28  WHAT  MAKES 

serve  some  Useful  purpose  after  the  corruption  which  he  has 
engendered  has  been  buried  with  him  in  a  nameless  grave. 

In  treating  this  question  of  the  rate  of  wages,  it  must 
constantly  be  kept  in  mind  that  money  is  but  the  instru- 
ment of  exchange,  that  real  wages  are  what  the  money  will 
buy,  and  there  cannot  be  more  real  wages  than  the  whole 
product,  less  the  share  of  capital.  If  then,  we  can  even 
approximate  the  value  of  the  product  and  divide  by  the 
known  number  of  persons  employed,  we  then  approximate 
the  annual  measure  or  average  rate  of  wages  in  terms  of 
money. 

At  the  risk  of  repetition  this  point  must  be  further  con- 
sidered, as  it  is  the  key  to  this  treatise. 

The  population  of  the  United  States,  in  the  census  year, 
consisted  of  a  little  over  fifty  million  persons,  or  about  ten 
million  families  of  five  each.  Substantially  one  in  every 
three  was  engaged  in  some  kind  of  gainful  occupation. 
Agriculture  was  and  is  the  leading  occupation.  Upon  small 
farms,  a  large  portion  of  the  produce  is  consumed  by  the 
farmer,  his  family,  and  his  laborers.  Upon  large  farms,  the 
greater  part  of  the  produce  is  sold.  In  the  families  of  coun- 
try mechanics,  much  productive  work  is  done  which  in  cities 
is  procured  by  purchase.  We  can  only  approximate  in  a 
general  way  the  value  of  the  domestic  consumption.  If  one 
tenth  of  the  consumption  of  the  country  is  of  the  nature  of 
purely  domestic  production  and  consumption,  which  is  never 
converted  into  terms  of  money  by  purchase  and  sale,  the 
total  sum  which  would  represent  such  domestic  consump- 
tion would  be  $20  to  each  person,  $100  to  each  family,  or 
$i,ooo,cxx),ooo  total  value.  Of  this  the  census  enumerator 
would  find  no  trace  in  the  figures  of  commerce.  This  is  a 
large  estimate,  undoubtedly,  of  the  domestic  consumption 
of  articles  which  might  be  or  might  have  been  procured  by 


THE  RATE   OF    WAGES?  29 

purchase,  but  which  were  in  fact  produced  and  consumed 
without  purchase  or  sale.  The  remainder  of  the  annual 
product,  at  whatever  sum  of  money  it  may  be  finally  val- 
ued when  sold  for  the  last  time  and  distributed  for  final 
consumption,  constitutes  the  value  of  the  product  converted 
into  terms  of  mon'by,  from  which  sum  all  money  profits,  all 
money  wages,  and  all  money  taxes  must  be  derived.  There 
can  be  no  other  source.  Each  bargain  for  a  sale  or  a  pur- 
chase is  and  must  be  made  in  terms  of  money.  The  manu- 
facturer, the  merchant,  and  the  shopkeeper  take  their  toll 
of  profit  in  money,  not  in  kind.  The  assessor  levies  a  tax 
payable  in  money.  When  this  tax  is  levied  upon  a  pro- 
ducer or  a  distributor,  it  is  charged  to  the  cost  of  the  busi- 
ness, and  is  thus  distributed  among  those  who  buy  the 
goods  for  consumption.  The  laborer  receives  his  wages  in 
money,  seldom  in  kind,  except  the  farm  laborer  ;  he  then 
converts  his  money  into  his  share  of  the  annual  product  by 
the  consumption  of  which  he  sustains  life.  The  total  sum 
of  money  which  represents  the  value  of  all  that  is  produced, 
at  its  point  of  final  consumption,  is  and  must  be  the  final 
measure  of  that  part  of  the  annual  product  which  is  bought 
and  sold.  Therefore,  all  profits,  wages,  and  taxes  constitute 
a  portion  of  this  lump  sum  ;  in  order  to  ascertain  what  the 
rate  of  profit,  the  rate  of  taxation,  or  the  rate  of  wages  may 
be,  we  must  ascertain  what  this  lump  sum  is,  and  how  it  is 
divided.  On  the  other  hand,  by  ascertaining  what  the  total 
sum  of  taxes,  the  sum  of  all  wages,  and  the  sum  of  all  profits 
may  be,  we  can  again  approximate  the  total  value  of  the 
annual  product.  No  absolute  results  can  be  reached  by 
either  method,  but  approximate  results  can  be  fairly  set  off, 
one  against  the  other.  This  is  what  the  writer  has  endeav- 
ored to  do. 

The  principle  which  I   have  attempted  to  sustain  in  this 


30  WHA  T  MAKES 

treatise  may  be  considered  without  any  regard  to  its  appli- 
cation to  the  existing  figures  of  the  present  date.     I  have 
given  these  figures,  howev^er,  in  the  way  of  an  illustration 
They  will  be  more  fully  treated  in  appendix  I. 

The  principle  might  be  stated  in  algebraic  symbols.  For 
instance,  given  the  question,  "  What  is  the  value  of  the  an- 
nual product  of  the  year  1884?"  It  would  consist  of  the 
following  elements  :  First,  the  wear  or  consumption  of  fixed 
capital  previously  accumulated  ;  the  proportion  of  the  quick 
capital  or  product  of  the  year  1883  brought  over  to  and 
consumed  in  the  year  1884,  in  order  to  begin  work.  Let 
these  two  elements  be  called  a.  To  them  would  be  added 
the  actual  product  of  the  year.  Let  this  be  called  b.  From 
this  product  a  certain  proportion  would  be  carried  over,  to 
begin  the  work  of  the  year  1885.  Let  this  be  called  c.  The 
formula  could  then  be  stated  in  the  following  terms: 
a-\-b  —  r  =  jr,  the  annual  product  which  is  subject  to  sub- 
division and  to  consumption. 

Let  profits  be  called  //,  sum  of  all  wages  r,  persons  en- 
gaged in  gainful  occupation  for  a  given  rate  of  wages,  f, 
and  the  average  rate  of  wages  i.  The  complete  formula 
would  then  be  as  follows : 

a-\-b — c-=.x 

If  i  be  the  average  of  all  there  is,  one  wage  earner  will 
earn  less,  another  more,  according  to  relative  capacity  and 
opportunity,  and  by  competition  each  with  the  other :  but 
these  earnings,  differing  each  with  the  other,  will  be  ab- 
solutely within  the  limit  of  / /  while  i  itself  will  annually 
stand  for  an  increasing  share  of  an  increasing  product,  if  my 
premises  are  sustained. 

In  a  computation  of  what  makes  the  total  accumulated 
wealth  of  the  United  States,  which  was  made  by  the  Census 


THE  RATE   OF   WAGES? 


31 


Department,  one  half  the  value  of  the  product  of  mines, 
oil  wells,  and  the  like,  was  taken  as  being  on  hand  at  a  given 
time,  constituting  a  part  of  the  accumulated  wealth,  together 
with  three  fourths  of  the  annual  product  of  agriculture  and 
manufacturing.  Working  from  these  data,  it  appears  that 
the  census  estimate  of  the  value  of  the  annual  product  of 
the  United  States  for  the  census  year  was  from  $8,200,000,- 
000  to  $8,500,000,000,  not  including  domestic  consumption- 
There  appears  to  be  no  actual  computation  of  the  value  of 
the  annual  product  in  the  census,  but  the  figures  used  in  the 
computation  of  wealth  yield  these  approximate  results. 
The  writer  had  reached  his  own  conclusions  by  very  differ- 
ent methods  from  those  used  by  the  Census  Department, 
and  had  satisfied  himself  that  if  there  be  added  to  that  part 
of  the  annual  product  which  is  sold,  and  which  is,  therefore, 
reduced  to  terms  of  price  in  money  in  the  markets  of  the 
world,  the  domestic  consumption  upon  farms  and  in  families, 
the  total  value  of  the  annual  product  would  not  exceed 
$10,000,000,000  in  the  census  year,  at  the  retail  prices  for 
final  consumption.  If  the  census  estimate  be  divided  by  the 
population  of  substantially  50,000,000  people,  we  reach 
S 1 60  to  $170  per  year  as  the  sum  representing  the  average 
annual  product  for  each  person,  or  a  fraction  less  than  fort>'- 
four  to  forty-seven  cents  per  day  for  365  days.  That  is  to 
say,  when  the  products  or  services  of  each  person  were 
brought  into  competition  in  the  markets  of  the  world,  the 
money  value  of  the  entire  commercial  product  in  the  census 
year  was  measured  by  the  average  sum  of  forty-four  to  fort}-- 
seven  cents'  worth  to  each  person.  My  own  computation 
gives  a  little  under  $200  to  each  person,  including  the 
domestic  consumption  of  farmers,  or  a  little  under  fifty-five 
cents'  worth  per  day.  That  is  to  say,  the  average  product 
of  each  person  may  be  estimated  by  any  one  who  will  go 


32  WHAT  MAKES 

into  the  market,  hire  shelter,  procure  food  and  clothing, 
and  save  something  out  of  what  fifty-five  cents  a  day  will 
pay  for  for  each  member  of  a  family.  If  no  more  is  pro- 
duced, no  more  can  be  had.  What  there  is  may  be  bought 
and  sold  ten  times  over ;  it  only  wastes  a  little  each  time ; 
it  does  not  increase.  Paper  may  be  substituted  for  true 
money,  and  the  rate  of  paper  wages  may  be  apparently 
doubled,  but  then  it  will  take  $i.io  in  paper  to  buy  what 
fifty-five  cents  gold  now  buys.  There  cannot  be  any  more 
shelter,  food,  fuel  and  clothing  sold  than  there  is  produced, 
and  the  value  in  money  of  all  that  there  is  produced  is  the 
final  measure  of  all  profits  and  wages.  The  subdivision  of 
all  there  is  produced,  therefore,  makes  the  rates  of  both 
profits  and  wages. 

If,  again,  we  call  $ i ,ooo,ooo,0(X)  the  domestic  consump- 
tion, and  value  the  salable  portion  at  $9,000,000,000,  and 
then  divide  by  the  whole  number  of  persons  in  productive 
work  (excepting  soldiers  and  minor  Government  employes), 
to  wit,  17,300,000,  we  reach  an  average  of  $520  as  the  annual 
measure  of  the  productive  services  of  each  person  thus 
engaged  in  useful  work,  each  one  at  work  sustaining  two 
others.  This  computation  may  be  proved  to  be  substan- 
tially correct  by  a  comparison  with  the  actual  wages  or 
earnings  of  all  classes,  which  were  treated  separately  in  the 
census,  giving  due  consideration  and  applying  judgment  to 
the  relative  value  of  the  work  done.  (See  appendix  I.  for 
exact  comparison.) 

It  may,  therefore,  be  assumed  that  the  average  value  of 
the  gross  product  of  each  person  who  was  engaged  in  any 
lucrative  or  productive  employment  in  the  United  States  in 
1880,  can  be  fairly  established  in  the  census  year  at  a  sum 
closely  approximating  $520.  If  such  is  the  measure  in 
money  of  all  that  was  produced,  then  all  wages,  profits, 


THE  RATE   OF    WAGES?  33 

taxes,  and  all  savings  or  additions  to  capital  must  have 
been  derived  from  such  a  sum.  There  can  be  no  other 
source  for  either,  unless  the  country  incurred  a  foreign  debt, 
which  it  did  not  in  any  great  measure.  It  paid  more  debt 
in  the  census  year  than  it  incurred. 

If  such  is  the  gross  sum,  let  us  see  what  the  net  sum  free 
from  taxes,  may  have  been.  In  the  same  census,  the  gross 
sum  of  all  National,  State,  county,  and  municipal  taxation, 
was  computed  in  round  figures  at  over  $700,000,000,  or 
over  %Ap per  capita  of  all  persons  engaged  in  gainful  occu- 
pations. If  we  apply  this  rate  to  the  average  share  of  the 
product  which  fell  to  each  person  who  was  occupied  in 
gainful  occupation,  we  reach  the  following  result :  Gross 
product,  $520  ;  taxation  a  little  under  8  per  cent.,  $40.00  ;  net 
share  of  the  annual  product,  free  of  taxes,  valued  at  $480. 
Now  it  will  be  apparent  if  only  one  in  2.90  persons  is  em- 
ployed in  gainful  or  productive  occupations,  then  2.90  per- 
sons must  be  subsisted  upon  what  $480  per  year,  or  $1.32 
per  day,  will  purchase,  or  45^  cts.  worth  to  each  person  ;  if  it 
be  considered  also  that  from  this  sum  must  be  set  aside 
profits  or  additions  to  capital  which  take  precedence  of 
wages  or  earnings,  then  it  will  at  once  appear  that  by  far 
the  larger  part  of  each  year's  product  must  be  consumed ; 
that  is  to  say  it  must  enter  into  the  cost  of  production.  In 
point  of  fact  each  year's  work  barely  suffices  for  each  year's 
wants  and  but  little  can  be  saved  or  added  to  capital  be- 
cause it  is  evident  at  a  moment's  consideration  that  not 
much  can  be  saved  out  of  what  45  cents  will  buy  for  each 
person  each  day.  There  is  no  absolute  method  of  determin- 
ing the  exact  proportion  of  the  annual  product  which  can 
be  set  aside  as  profit  or  addition  to  capital,  nor  of  ascertain- 
ing that  part  which  constitutes  the  actual  wages  or  earn- 
ings.    All  that  can  be  said   is  this  :    If  10  per  cent,  of  the 


34  ^^A  T  MAKES 

gross  product  can  be  set  aside  in  a  normal  year,  for  the 
maintenance  or  increase  of  capital,  that  is  to  say,  $48.00, 
out  of  each  person's  net  share  of  the  whole,  then  the  aver- 
age rate  of  wages  or  earnings  of  all  the  people  of  this 
country  engaged  in  gainful  occupation,  is  at  the  rate  of 
$432.00  per  annum,  $1.19  per  day  or  $1.44  per  working  day. 
This  result,  again,  fairly  approximates  to  the  disclosure  of 
the  census,  if  it  be  compared  with  the  specific  ascertained 
earnings  of  persons  engaged  in  special  branches  of  industry. 
If  any  thing,  it  is  a  large  estimate  rather  than  a  small  one.' 
If  the  foregoing  premises  be  admitted,  it  follows  of  ne- 
cessity that  so  far  as  those  who  work  for  wages  are  con- 
cerned, the  relative  or  proportionate  rate  which  each  one  or 
each  class  may  receive  cannot  be  in  any  very  large  measure 
affected  by  the  sum  which  is  set  aside  as  profit  or  increase 
of  capital,  but  must  be  mainly  affected  by  the  competition 
of  laborer  with  laborer  and  will  be  finally  determined  by 
the  relative  efficiency  of  each  person  within  the  limit 
of  the  average  proportion  which  his  class  receives  out  of  the 
annual  product.  That  is  to  say,  the  relative  condition  of 
each  class  of  laborers  must  be  determined  by  the  variation 
from  a  standard  or  average  which  is  determined  by  the 
quantity  and  price  of  the  aggregate  product  of  that  class, 
i.  e.,  in  that  special  branch  of  industry.  The  general  rate  of 
wages  can  therefore  only  be  raised  by  an  increase  of  product 
coupled  with  a  wider  market  commensurate  with  such  in- 
crease, so  that  the  price  may  be  maintained.  Absolute 
wages  may  be  increased  although  the  rate  in  money  may 
not,  by  an  increase  in  the  product,  accompanied  by  a 
decrease  in  the  price,  so  that  the  same  or  a  less  rate  of 
wages  may  buy  more  commodities.  The  gross  product 
may  be  increased  by  two  methods  only ;  first,  by  the  intel- 

'  See  table  of  earnings  or  wages  in  appendix. 


THE  RATE   OF    WAGES?  35 

ligent  use  of  the  increase  of  capital ;  and  second,  by  the 
more  intelligent  co-operation  of  labor  with  capital.  Con- 
tention or  antagonism  can  only  result  in  diminished  rates 
both  of  profits  and  of  wages.  Prices  and  rates  of  wages 
can  only  be  maintained  by  enlarging  the  market  as  labor 
becomes  more  effective  and  a  greater  quantity  of  things  is 
produced  by  a  decreasing  number  of  persons.  When  a 
greater  quantity  of  any  given  product  is  made  by  an 
improvement  in  machinery  or  a  new  invention,  and  men 
who  have  before  been  employed  in  that  art  are  no  longer 
wanted — then  a  wider  market  must  be  found  for  products 
which  remain  within  their  capacity  to  produce.  Hence, 
those  nations  which  apply  machinery  in  greatest  measure, 
and  thus  increase  the  quantity  of  their  product  while  di- 
minishing the  cost  as  well  as  the  number  of  persons  em- 
ployed, possess  the  greatest  power  of  competition  in  supply- 
ing other  nations  in  which  all  the  arts  are  mainly  handicrafts. 
For  instance,  England  and  the  United  States  compete  with 
each  other  in  supplying  China  with  a  portion  of  the  cotton 
fabrics  needed  by  the  Chinese  (supplying  perhaps  ten  per 
cent,  of  the  cotton  fabrics  which  are  consumed  in  China)  in 
exchange  for  tea,  silk,  etc.,  etc.  The  cultivation  and  pre- 
paration of  tea  and  silk  being  of  necessity  handicrafts,  this 
exchange  would  occur  even  if  no  climatic  condition  entered 
into  the  case.  The  exchange  of  fabrics  made  by  machinery 
for  tea  and  silk,  yielding  each  nation  what  it  needs  with  the 
least  effort,  although  the  quantity  of  labor  varies  greatly. 

It  therefore  follows  that  the  power  to  control  commerce 
with  the  non-machine  using  races,  who  constitute  more 
than  three  fourths  of  the  population  of  the  globe,  rests 
with  that  nation  which  applies  machinery  most  effec- 
tively to  the  greatest  natural  resources,  and  whose  pro- 
duct is  least  diverted  from  being   applied    to    profits  and 


^TrntJ 


36  WHA  T  MAKES 

wages  by  destructive    taxation,  such  as  the  support  of   a 
great  standing  army  or  costly  navy. 

The  invention  of  machinery  creates  commerce.  If  we  re- 
vert to  the  former  conditions  of  life  in  the  different  sections 
of  the  United  States,  may  we  not  find  an  explanation  of  the 
vast  increase  in  the  domestic  commerce  of  the  country,  in  the 
greater  interdependence  of  each  section  of  the  country  upon 
each  other  section,  as  well  as  in  the  greater  interdependence 
of  individuals  upon  each  other.  Exchanges  of  product  for 
product  have  widened  and  increased,  perhaps  in  greater 
measure  than  the  aggregate  product  itself.  If  we  recall  the 
conditions  of  life  of  the  New  England  farmers  and  artisans 
in  the  early  part  of  the  century,  a  very  small  money  income 
sufficed  them,  because  they  lived  mainly  upon  what  they 
produced  themselves,  and  because  many  of  their  exchanges 
were  made  without  the  intervention  of  any  money.  They 
swopped  or  bartered  services  in  the  erection  of  their  dwell- 
ings and  in  harvesting  ;  they  raised,  spun,  and  wove  their 
own  wool ;  they  packed  their  own  pork  ;  they  raised  their 
own  corn  and  paid  for  grinding  it  by  a  toll  in  kind  ;  they 
cut  their  own  fuel.  These  primitive  conditions  can  even 
now  be  observed  in  the  mountain  sections  of  the  Southern 
States.  But  even  under  such  conditions,  the  consumption 
of  food  and  fuel  of  each  person  may  not  have  varied  greatly 
in  quantity  or  weight  from  that  of  the  present  time.  It 
differed  greatly  in  kind  and  in  quality,  and  also  in  the 
method  by  which  it  was  attained ;  but  the  quantity  of  food 
in  ounces,  which  is  the  final  standard,  cannot  greatly  vary 
in  one  period  as  compared  to  another.  We  waste  a  great 
deal  more  now  than  we  did  in  those  early  days,  but  our 
actual  consumption  of  food  per  person  cannot  have  increased 
in  any  very  large  measure.  In  the  primitive  days,  under 
these  primitive  methods,  the  labor  was  so  arduous  and  the 


THE  RATE   OF    WAGES? 


37 


hours  of  work  were  so  continuous  that  only  the  strongest 
survived.  The  figures  representing  commerce  were  very- 
small  and  when  wages  were  paid  at  all,  they  were  at  very  low 
rates  for  long  hours  of  merely  manual  labor.  Under  the  mod- 
ern method  of  extreme  subdivision,  and  the  application  of 
adequate  machinery,  i,  e,,  capital,  the  labor  is  less  toilsome, 
the  hours  of  work  are  shorter,  the  weakest  can  find  some- 
thing to  do,  each  serves  the  other,  and  in  the  process  of 
manifold  exchanges,  the  figures  representing  commerce  rise 
to  almost  incomprehensible  millions;  yet  the  actual  quan- 
tity consumed,  as  I  have  said  before,  may  not  have  varied  in 
any  great  measure,  so  far  as  food  and  fuel  are  concerned. 
So  far  as  clothing  is  concerned,  production  and  consumption 
have  increased  enormously. 

The  end  of  all  this  vast  system  of  exchange  is,  however, 
that,  in  one  way  or  another,  each  person  may  secure  about 
three  pounds  of  food  per  day,  a  few  yards  of  cotton  or 
woollen  cloth  each  year,  two  or  three  tons  of  coal  or  five  or 
six  cords  of  wood  a  year,  and  a  given  number  of  cubic  feet 
of  space,  sheltered  by  a  roof.  They  needed  as  much  per 
person  of  the  absolute  necessaries  of  life  fifty  or  a  hundred 
years  since  as  they  do  now,  but  they  obtained  them  only  by 
working  twice  or  thrice  as  hard.  They  were  more  independ- 
"eht,  less  interdependent.  There  was  far  less  capital,  and 
much  more  arduous  and  excessive  labor.  The  conditions 
of  life  were  more  equal,  but  it  was  the  equality  of  sordid, 
continuous,  excessive  manual  labor,  aided  neither  by  the 
factory  nor  by  the  railroad  ;  neither  by  the  more  modern  in- 
ventions of  the  masters  of  science,  nor  by  the  administrative 
and  organizing  power  of  the  great  capitalists,  without  whose 
potential  work  all  modern  progress  would  have  been  sub- 
stantially impossible.  The  fortunes  which  those  great  di- 
rectors' of  industry  have  made  for  themselves  bear  but  the 


38  WHAT  MAKES 

proportion  of  a  small  fraction  to  the  labor  which  they  have 
saved  their  fellow-men. 

I  will  repeat  again  what  I  have  said  before :  the  late 
Cornelius  Vanderbilt  may  be  taken  as  an  example  of  a  com- 
munist in  a  true  sense.  He  was  the  greatest  communist  of 
his  age.  He  consolidated  and  perfected  the  railroad  service 
in  such  a  way  that  a  year's  supply  of  meat  and  bread  can  be 
moved  one  thousand  miles,  from  the  western  prairies  to  the 
eastern  workshops,  at  the  measure  of  cost  of  a  single  day's 
wages  of  a  mechanic  or  artisan  in  Massachusetts — that  is  to 
say,  if  the  mechanic  or  artisan  of  the  East  will  give  up  one 
holiday  in  a  year,  he  removes  one  thousand  miles  of  dis- 
tance between  himself  and  the  main  source  of  his  supply  of 
necessary  food.^ 

*  I  have  cited  the  late  Cornelius  Vanderbilt  as  the  great  communist  of  his  age 
for  the  reason  that  he  may  be  said  to  have  first  invented  the  consolidation  of  a 
through  line  of  railway  from  the  prairies  of  the  West  to  the  markets  of  the  East, 
with  a  consequent  reduction  in  the  cost  of  bread  and  meat  to  the  dense  popula- 
tion of  the  Atlantic  seaboard.  By  this  consolidation  and  effective  service, 
one  thousand  miles  of  distance  have  been  substantially  overcome  at  such  a 
small  cost  as  to  have  rendered  the  choice  of  position,  at  any  point  within  that 
range,  a  matter  of  so  little  moment  in  respect  to  the  supply  of  Western  food  as 
to  be  practically  out  of  consideration.  For  instance,  the  value  of  the  product  of 
five  hundred  operatives  in  a  coarse  cotton  factory  in  Massachusetts  is  over  one 
million  dollars — all  the  western  flour  and  meat  which  these  operatives  need  in  a 
year  can  be  moved  from  Chicago  to  Lowell  at  a  cost  of  $600,  and  sometimes 
for  less. 

It  is  sometimes  urged  that  such  great  fortunes  as  that  of  Vanderbilt  and  a 
few  others  are  against  the  public  interest,  and  that  some  method  ought  to  be  de- 
vised for  limiting  their  accumulation.  This  ungrounded  prejudice  has  mainly 
arisen  from  the  jealousy  rightly  caused  by  the  great  fortunes  which  were  accu- 
mulated by  expert  gamblers  under  the  malignant  system  of  the  greenback 
or  legal-tender  paper  money  before  these  notes  had  been  made  redeemable  in 
gold  coin. 

It  is  very  true  that  the  most  of  the  fortunes  which  were  made  out  of  the 
fluctuations  of  the  currency  were  speedily  lost,  but  the  foundations  of  a  portion 
of  the  most  conspicuous  existing  fortunes  were  laid  under  these  bad  conditions. 

It  is  hoped,  and  may  be  believed,  that  advocates  of  paper  money  will 


THE  RATE   OF    WAGES?  39 

Having  attempted  to  estimate  the  main  factors  which  de- 
termine the  general  or  average  rate  of  wages  at  a  given  time, 
we  may  now  consider  the  subdivision  or  the  forces  which 
affect  the  subdivision  of  the  true  wages  fund.  Why  is  the 
average  rate  of  wages  in  a  given  occupation  two  dollars  a 
day  in  one  place,  and  one  dollar  a  day  in  another,  within  the 
same  country  at  the  same  time  ?  Or,  why  has  the  rate  of 
wages  in  the  same  place  been  one  dollar  a  day  at  one  period, 

never  again  be  enabled  to  impose  such  a  malignant  instrument  of  fraud  upon 
the  community. 

Other  fortunes  which  rightly  excite  jealousy,  and  which  might,  perhaps,  have 
been  prevented  by  legal  measures,  are  those  which  have  been  made  by  fraud 
and  by  the  abuse  of  trust  in  corporations  on  the  part  of  a  very  few  conspicuous 
or  notorious  railway  promoters  and  speculators.  They  need  not  be  named 
because,  fortunately  for  the  welfare  of  the  community,  the  number  of  persons 
who  have  successfully  stolen  the  property  of  those  who  trusted  them  is  very 
limited  ;  hardly  more  than  one  name  will  come  to  the  mind  of  any  person  as  the 
chief  exponent  of  this  nefarious  class  at  the  present  time. 

But  in  regard  to  such  persons  it  may  be  said  that  they  are  in  the  nature  of 
monstrosities  ;  they  are  the  spawn  of  a  corrupt  period  ;  in  one  way  or  another, 
the  man  who  corrupts  a  court  will  be  abated  in  some  way  as  a  public  nuisance, 
if  death  does  not  fortunately  remove  him,  or  ruin  does  not  overtake  him. 

The  great  fortunes  of  those  who  have  fairly  earned  them  by  their  capacity  to 
direct  and  use  great  masses  of  capital  in  the  most  efficient  way,  cannot  be  a  sub- 
ject of  jealousy,  suspicion,  or  distrust.  As  well  might  large  steam-engines  be  a 
cause  of  distrust  and  a  clamor  be  raised  for  the  substitution  of  a  number  of  little 
ones. 

I  have  endeavored  to  show  how  both  the  rate  of  wages  and  the  purchasing 
power  of  the  wages  depend  wholly  upon  the  abundance,  ready  distribution,  and 
'  quick  sale  of  the  joint  product  of  capital  and  labor. 

It  is  now  constantly  affirmed  by  certain  enthusiasts  and  sentimentalists,  who 
are  sustained  by  cranks  and  demagogues,  that,  inasmuch  as  all  production  rests 
ultimately  upon  labor,  therefore  laborers  are  entitled  to  the  first  consideration 
and  the  remuneration  of  capital  ought  equitably  to  be  subjected  to  the  prior 
claims  of  labor. 

This  extreme  position  is  the  exact  reverse  of  the  conception  of  the  relations 
of  labor  and  capital  which  prevailed  during  the  first  half  of  the  present 
century,  when  the  science  of  political  economy  first  became  a  matter  of  real 
study.      At  that  time  capital  received  the  first  consideration  and  labor  was 


40  WHAT  MAKES 

and  two  dollars  a  day  at  another,  at  different  times  ?  Third, 
why  is  it  that  one  true  dollar  will  buy  more  in  one  place 
than  two  true  dollars  will  buy  in  another  ?  Why  do  abso- 
lute wages  vary,  as  they  do  and  have  varied,  in  such  propor- 
tions as  are  indicated  by  the  rates  in  money  ?  And  why  do 
the  rates  of  wages  vary  even  when  the  prices  of  commodi- 
ties are  the  same?     In  answer  to  such  questions  as  these  we 

deemed  subordinate,  or  subject,  we  might  say,  to  capital.  One  extreme  posi- 
tion is  as  utterly  false  as  the  other  ;  both  are  mischievous  ;  but,  if  injustice  is 
done  in  either  direction,  it  is  the  laborer  who  suffers  most  and  the  capitalist  who 
suffers  least.  Perhaps  the  greatest  measure  of  suffering  to  laborers  who  are 
nominally  free  will  be  caused  when  capital  and  capitalists  are  subjected  to  un- 
just restrictions  and  injudicious  discrimination. 

The  main  purpose  of  this  treatise  has  been  to  bring  into  most  conspicuous  view 
the  great  fact  that  capital  is  a  force  which  may  be  applied  to  the  increase  of 
production  axidi  yfhich.  ^ro7?iotes  abundance  \n  the  greatest  measure;  but  that  it 
is  not  a  substance  to  be  divided,  on  the  division  of  which  the  wages  of  the 
laborers  depend. 

Now,  every  great  force  requires  the  most  intelligent  and  careful  direction  ; 
the  greater  the  force,  the  greater  the  measure  of  the  intelligence  and  care  re- 
quired. For  instance,  since  the  introduction  of  the  steam-engine,  or  the  appli- 
cation of  gunpowder  to  the  purposes  of  mining,  no  force  has  been  applied  with 
such  general  benefit  to  humanity  as  the  railroad  whereby  the  products  of  the 
richest  sections  of  the  world's  surface  are  distributed  over  the  widest  area. 

So  long  as  the  railway  service  between  the  East  and  the  West  constituted  de- 
tached sections,  several  of  which  existed  betwean  Albany  and  Buffalo,  as  well 
as  elsewhere  between  New  York  and  Chicago — each  section  being  worked  un- 
der a  different  administration  more  or  less  effective — the  general  service  was 
ineffective  and  costly. 

It  required  a  man  of  positive  genius  in  the  use  of  capital  and  of  the  greatest 
administrative  power  to  bring  into  effect  the  consolidation  of  this  single  line. 

It  matters  not  what  the  motive  of  the  late  Cornelius  Vanderbilt  may  have 
been.  It  matters  not  what  may  have  been  the  motives  of  those  who  consoli- 
dated that  most  wonderful  organization  of  all,  the  Pennsylvania  system  of  rail- 
ways. It  matters  not  what  may  have  been  the  motives  of  those  who  have  laid 
out  the  several  great  systems  which  are  scattered  over  the  country,  since  Van- 
derbilt set  the  example  and  led  the  way.  The  general  result  of  all  this  work 
has  been  a  reduction  of  the  railway  charge  for  moving  merchandise  through- 
out the  United  States  to  the  lowest  possible  point  consistent  with  leaving  any 


THE  RATE   OF    WAGES?  4I 

are  often  answered  with  the  orthodox  expression  :  "  Supply 
and  demand  determine  such  points."  But  this  is  no  con- 
clusive answer  until  we  know  under  what  law  the  supply- 
has  been  assured,  and  under  what  law  the  demand  exists. 
These  terms,  supply  and  demand^  are  commonly  used  as  if 
each  were  absolutely  certain  to  induce  the  other ;  but  such 

incentive  of  profit  sufficient  to  induce  the  great  masters  of  the  subject  to 
continue  their  work. 

This  work  is  not  that  of  the  laborer  in  the  sense  in  which  that  word  is  used 
by  so-called  labor  reformers.  It  is  not  labor  in  the  common  acceptation  of  the 
term,  yet  it  is  an  effort  of  the  human  mind  of  such  a  quality  that  except  capital 
had  thus  come  under  the  control  of  these  men  all  the  efforts  of  laborers  would 
have  utterly  failed  to  promote  the  general  welfare.  The  farmers  of  the  West 
would  have  "smothered  in  their  own  grease,"  and  would  have  continued  to 
burn  their  Indian  corn  for  fuel,  while  the  workman  of  the  East  might  have 
starved  or  would  have  been  compelled  to  labor  long  and  arduously  on  the  sterile 
soil  of  New  England,  in  order  to  obtain  a  mere  subsistence. 

The  true  function  of  capital  and  of  the  capitalists  is  of  the  utmost  beneficence. 
It  cannot  be  exerted  in  the  present  condition  of  the  world  except  by  way  of  the 
ownership  of  land  and  of  capital,  subject  to  the  limitations  and  to  the  duties 
which  are  implied  by  existing  laws.  That  the  relations  of  labor  and  capital 
may  be  measurably  changed  and  perhaps  improved  by  changes  in  legislation  es- 
pecially in  respect  to  taxation,  may  not  be  denied  ;  but  the  fundamental  prin- 
I  ciples  of  individual  ownership  subject  only  to  the  right  of  eminent  domain  and 
'  to  the  payment  of  taxes  are  essential  to  that  abundant  production  and  ready  dis- 
tribution which  makes  for  the  general  welfare. 

As  human  nature  is  now  constituted  the  individual  control  of  capital  is  essential 
to  its  adequate  use.  Corporations  are  of  the  nature  of  artificial  persons,  and 
even  they  never  succeed  unless  there  is  some  one  man  capable  of  becoming  the 
head  or  chief  officer,  sustained  by  as  many  able  assistants  as  the  case  requires. 

Even  the  successful  co-operative  shops  in  Great  Britain  exert  the  closest  com- 
petition in  purchasing  their  goods  and  pay  very  high  salaries  to  the  persons  who 
do  this  part  of  their  work — else  they  would  surely  fail.  Every  co-operative 
factory  is  under  the  personal  control  of  a  well-paid  superintendent. 

"The  tools  to  him  who  can  use  them."  Capital  is  a  tool  which  cannot 
be  used  except  to  the  mutual  benefit  of  capitalist  and  laborer.  Service  for  ser- 
vice is  its  necessary  law — the  only  open  question  is  the  ratio  which  each  service 
bears  to  the  other,  and,  if  my  observations  are  sustained,  the  law  of  competition 
\  is  that  the  ratio  of  profits  diminishes  while  the  rate  of  wages  steadily  increases. 


ill 


42  WHAT  MAKES 

is  far  from  being  the  truth,  except  it  may  be  after  a  long 
interval  of  time.  Capital  may  become  so  effective  by  the 
improvement  of  the  machinery  in  which  it  consists  that  a 
few  laborers  may  be  able  to  supply  an  article  of  the  utmost 
necessity  in  such  rapid  and  excessive  measure  as  to  keep 
the  quantity  beyond  the  purchasing  capacity  of  those  who 
need  it ;  the  need  may  exist,  but  the  demand — that  is  to 
say,  the  purchasing  capacity — is  limited  not  only  by  outside 
conditions,  but  by  personal  mental  capacity  and  manual 
ability  of  consumers.  We  may  assume,  for  instance,  a  com- 
munity consisting  of  cotton  growers,  who  raise  and  pick  cot- 
ton as  a  handicraft,  and  of  cotton  spinners  and  weavers  who 
have,  also,  spun  and  woven  the  cotton  fibre  as  a  handicraft 
upon  spinning  wheels  and  hand-looms.  These  two  classes 
now  exist  side  by  side  in  the  mountain  sections  of  the  South. 
Up  to  a  given  date  these  two  sets  of  persons  may  have  ex- 
changed services  with  each  other  in  the  ratio  of  one  spinner 
and  one  weaver  to  four  growers  of  cotton  ;  or,  in  order  that 
we  may  be  able  to  eliminate  those  who  are  displaced  by  an 
improvement  in  machinery,  we  will  assume  greater  num- 
bers ;  say  in  the  ratio  of  one  hundred  spinners  and  weavers 
to  four  hundred  growers.  But  suddenly  capital,  in  the  form 
of  a  cotton  factory,  takes  the  place  of  hand  spinning  and 
hand  weaving  ;  the  capacity  of  a  single  person  operating  the 
machinery  of  a  modern  factory  being  sixty- to  one  hundred- 
fold the  capacity  of  a  hand  worker,  and  the  outside  market 
for  the  cotton  fabric  being  only  among  the  cotton  growers, 
one  hand  in  the  factory  exchanges  with  them,  taking  their 
cotton  and  furnishing  them  with  cloth,  and  ninety-nine 
hand  spinners  and  weavers  are  displaced.  They  may  know 
no  other  art.  They  demand  cotton  fabrics  to  cover  their 
nakedness,  but  they  can  no  longer  exchange  cloth  for 
cotton.     The  cotton  growers  may  be  able  to  increase  their 


THE  RATE   OF  WAGES? 


43 


product  in  some  measure,  but  they  cannot  or  will  not  ex- 
change with  the  hand  spinners  and  weavers  when  they  can 
exchange  on  better  terms  with  the  factory.  The  cotton 
growers  and  the  factory  operative  may  each  have  more  than 
they  had  before,  and  may  each  prosper  ;  but  until  the 
ninety-nine  hand  spinners  and  weavers  who  have  been  dis- 
placed can  qualify  themselves  to  do  some  other  service  for 
the  cotton  growers,  or  until  the  cotton  growers  have  devel- 
oped a  want  for  something  else  than  hand  spinning  and 
weaving,  there  may  be  no  equality  in  the  distribution  of 
the  greater  supply  of  cotton  fibre  and  of  cotton  fabric ; 
there  may  be  want  in  the  midst  of  plenty.  The  hard  and 
fast  rules  of  supply  and  demand  must  therefore  be  varied 
according  to  the  capacity  of  the  persons  on  whose  wants 
supply  and  demand  are  predicated.  We  heard  a  great  deal 
about  over-production  during  the  long  depression  between 
1873  and  1879,  and  we  are  hearing  the  same  cry  of  over- 
production at  the  present  time  of  depression  in  1884.  Why 
is  this  ?  Over-production  simply  means  an  excess  of  food, 
fuel,  and  means  of  shelter  ;  in  other  words,  it  means  supply 
of  capital.  It  cannot  be  said  that  the  people  of  this  coun- 
try all  have  so  much  food,  fuel,  and  shelter  that  there  is  no 
demand  for  any  more.  On  the  contrary,  want  exists ;  the 
need  is  urgent,  but  the  demand  does  not  become  potential 
because  something  is  wanting  to  bring  supply  and  demand 
to  the  terms  of  an  exchange.  It  takes  two  to  make  an  ex- 
change. One  may  have  what  the  other  wants,  but  if  the 
other  cannot  serve  the  one,  both  suffer — one  from  over- 
production, the  other  from  under-consumption. 

We  may  perhaps  find  a  clue  to  this  apparent  paradox  by 
a  consideration  of  one  single  branch  of  industry — to  wit,  the 
construction  of  railways.  A  railroad  is,  to  all  intents  and 
purposes,  a  product  of  handicraft.    The  work  done  in  the  con- 


44  WHAT  MAKES 

struction  of  a  railroad  mainly  consists  in  positive,  direct  hu- 
man labor,  in  levelling  the  way,  filling  up  the  valleys,  pierc- 
ing the  hills,  working  in  mines  and  in  blast  furnaces.  Every 
mile  of  railroad  added  to  our  existing  measure  stands  for 
the  work  of  about  fifty-six  men,  mostly  common  laborers, 
working  one  year.  In  1882  we  constructed  over  1 1,500  miles 
of  new  railroads.  In  1884  we  shall  construct  less  than  5,000 
miles.  More  than  400,000  common  laborers  have  been  dis- 
charged from  work  by  this  change  in  this  one  branch  of 
constructive  enterprise.  They  want  food,  fuel,  means  of 
shelter,  and  clothing  now  as  much  as  they  did  in  1882  ;  they 
represent  need  or  potential  demand.  Over-production,  on 
the  other  hand,  represents  supply;  but  until  other  work 
within  the  capacity  of  com,mon  laborers  is  found,  the  wants 
or  demand  of  these  men  will  not  be  met,  and  the  over-pro- 
duction or  excess  of  supply  will  not  be  consumed.  The 
final  end  of  such  a  condition  is,  of  course,  that  pauperism 
ensues  unless  an  adjustment  of  labor  can  be  made,  and  the 
over-production  or  excess  will  then  be  distributed  by  the 
noxious  method  of  alms-giving  or  State  aid.  The  only  true 
remedy  is  to  develop  the  individual  capacity  of  each  common 
laborer  and  to  render  him  capable  of  performing  more  than 
one  kind  of  service.  To  use  a  Yankee  expression,  we  must 
evolve  "■  gumption,"  which  is  a  purely  personal  quality,  in 
order  that  there  may  be  neither  over-production  nor  under- 
consumption. 

Let  us  now  return  to  the  direct  question  :  What  makes  the 
rate  of  wages  ?  I  will  now  challenge  your  attention  by  sub- 
mitting certain  paradoxical  propositions  which  I  will  pres- 
ently prove  by  examples.  Although  subject  to  exceptions 
and  to  temporary  interruptions,  they  take  the  form  of  rules  of 
substantial  and  uniform  application  if  time  be  given  them  to 
work.     In  any  given  country  like  the  United  States,  where 


THE  RATE   OF  WAGES?  45 

the  people  are  substantially  homogeneous,  where  the 
means  of  inter-communication  are  ample,  where  there  are 
no  hereditary  or  class  distinctions,  and  where  there  is  no 
artificial  obstruction  to  prevent  commerce,  high  rates  of 
wages  in  money  will  be  the  natural  and  therefore  necessary 
result  of  low  cost  of  production  in  labor.  That  is  to  say, 
the  two  forces  of  capital  and  labor  being  combined  in  the 
production  of  any  given  commodity,  the  greatest  quantity 
of  that  commodity  will  be  produced  where  the  conditions 
are  most  favorable  and  where  the  least  number  of  persons 
is  therefore  required  to  do  the  work. 

To  that  point,  the  best  workmen  and  the  most  adequate 
capital  will  surely  tend.  This  product,  whatever  it  may  be, 
will  then  fall  into  the  general  market  of  the  country,  to  be 
converted  into  terms  of  money  by  sale,  and  will  there  meet 
other  commodities  of  like  kind  which  have  been  produced 
elsewhere  under  less  favorable  conditions  or  by  less  skilful 
persons,  with  the  application  of  less  adequate  capital,  i.  e., 
poor  machinery.  That  portion  which  has  been  produced 
under  the  best  conditions,  will  therefore  be  the  representative 
of  the  work  of  the  smallest  number  of  persons  ;  and  that 
which  is  produced  under  the  least  favorable  conditions,  of 
relatively  the  larger  number  of  persons.  Equal  quantities 
from  each  source  being  sold,  the  sum  of  money  recovered 
from  the  sale  will  be  the  same,  and  it  will  of  course  yield  on 
the  one  hand  to  those  most  favorably  situated,  large  profits 
and  high  wages  to  the  small  number  employed  ;  and  on 
the  other  hand  small  profits  and  low  wages  to  the  larger 
number  less  favorably  placed.  These  relative  conditions 
may  continue  for  very  many  years,  as  it  is  not  easy  to  change 
the  place  either  of  capital  or  of  large  forces  of  laborers.  All 
will  not  go  to  the  most  favorable  place,  because  there  are 
many  other  things  than  mere  money  which  control  the  disposi- 


46  WHAT  MAKES 

tion  of  population.  For  instance,  I  have  given  some  figures 
relating  to  the  production  of  wheat  on  the  great  plains  of  the 
far  northwest.  The  wheat  there  produced  is  greater  in  quan- 
tity in  ratio  to  the  capital  and  to  the  number  of  laborers  em- 
ployed, than  in  any  other  part  of  this  country,  and  wages 
are  very  high  in  the  harvest  season  ;  but  it  does  not  follow 
that  every  person  who  has  been  engaged  in  raising  wheat  in 
Central  New  York  will  leave  his  farm,  whether  he  be  owner 
of  the  farm  capital,  or  laborer.  There  are  many  conditions 
of  life  in  Central  New  York  which  will  keep  men  there  in 
preference  to  migrating  to  Dakota,  even  though  both  profits 
and  wages  be  less.  Hence  it  follows,  that  although  the  total 
production  of  any  given  thing  may  not  be  concentrated  at  the 
very  best  point,  it  will  yet  be  found  to  be  true  that  where 
the  conditions  are  the  best,  the  cost  measured  in  terms  of  days 
of  labor  will  be  lowest,  and  the  wages  measured  in  terms  of 
money  per  day  will  be  the  highest  ;  the  high  money  wages 
being  the  necessary  consequence  of  the  low  labor  cost.  Con- 
versely, low  rates  of  money  wages  are  the  natural  and  neces- 
sary result  of  a  high  labor  cost  of  production.  This  rule  mainly 
affects  such  products  as  are  made  by  handwork,  or  which  of 
necessity  remain  handicrafts,  i.  e.,  work  in  which  the  hand 
is  assisted  only  by  very  simple  tools  of  which  each  opera- 
tion is  guided  by  the  hand.  In  such  cases  both  the  materials 
worked  upon  and  also  the  product  may  bear  a  very  high 
price ;  but  the  work  upon  them,  not  being  aided  by  effec- 
tive machinery,  the  quantity  of  labor  will  be  very  large,  and 
the  result  of  the  sale  may  therefore  leave  but  a  very  small 
sum  to  be  divided  among  very  many  laborers  after  the  cost 
of  materials  has  been  set  aside.  All  mere  handicrafts  are 
quickly  overcrowded,  except  such  as  call  for  artistic  or 
original  power  of  design.  For  instance,  after  the  pattern  is 
drawn  it  takes  merely  manual  dexterity  to  make  Brussels 


THE   RATE   OE  WAGE.";?  47 

lace.  The  material  which  is  used  in  this  branch  of  industry- 
is  fine  and  costly  cotton  thread,  which  is  converted  into  lace  by- 
hand  without  the  aid  of  any-  machinery  whatever,  but  merely 
by  the  use  of  two  or  three  simple  tools  ;  the  lace-makers  of 
Brussels  are  among  the  poorest  of  the  poorer  classes  of 
European  operatives.  They  work  at  the  very  lowest  rates 
of  wages,  which  will  barely  keep  them  in  existence,  but 
their  product  is  of  very  high  cost  in  money.  The  very  best 
Lyons  silks  and  German  velvets  are  other  examples.  They 
are  made  upon  hand-looms  of  the  most  primitive  kind.  Beet- 
root sugar  is  another  example.  Beets  require  constant  hand 
work  in  weeding.  We  cannot  afford  the  time  or  labor  for 
such  work  so  long  as  we  can  exchange  wheat  raised  by 
machinery  for  money  and  with  the  money  buy  our  sugar.  In 
all  handicrafts  the  quantity  of  labor  is  very  great,  but  even 
at  the  high  prices  which  such  products  bring,  the  total  sum 
of  money  recovered  from  the  sale  leaves  but  a  very  low  rate 
lof  wages  to  be  divided  among.those  who  have  performed  the 
work.  /^•-W   i\<  JXy  tjiy^^^}lJL    ^  <.-<^<^*-^  ^^^ 

■'    It    thus  becomes /arf-^a^p^f^ff^^ 
must  be  determined  by  wh'at  the  product  will  bring  in  the 
market,  from  which  must  be  deducted  materials  and  profits. 
The  total  annual  product  may  be  converted  into  a  lump  sum 
of  money,  which  will  represent  the  combined  result  of  the 
sale  of  each  particular  part  of  the  annual  product,  each  part 
.of  which  has  been  separately  converted  into  a  definite  sum 
A  of  money  by  sale.     From  the  gross  sale  of  the  whole  the 
\\ general  rates  of  wages  and  profits  are,  and  must  be  derived  ; 
and  from  the  sale  of  each  particular  part  the  rate  of  wages 
and   the  rate  of  profit   on  that  part  i.  e.,  in  that  branch  of 
industry,  must  be  measured  and  defined. 

So  long  as  we  consider  the  total  product  of  the  United 
States  as  a  unit  or  single  subject  of  division,  the  conception 


4^  WHAT  MAKES 

of  that  division  may  be  limited  to  the  two  objective  points 
of  profits  and  wages. 

Reverting  to  the  algebraic  formula,  a  simple  statement 
serves  :  x  being  the  value  of  the  annual  product,  the  for- 
mula is :  X  —  a  (profits)  =  b  (the  sum  of  the  wages  of  all 
persons  employed).  But  when  we  take  up  any  special  art 
the  proposition  becomes  a  very  complex  one,  and  it  is 
extremely  difficult  to  separate  the  various  elements  of  a 
given  cost,  except  by  the  measure  in  money  in  which  such 
elements  of  cost  are  usually  expressed.  Each  part  of  the 
work  must  be  considered  separately  in  order  to  prove  that 
the  rate  of  wages  of  each  body  of  workmen  who  are  en- 
gaged in  each  part  of  the  work  constitutes  a  remainder  over, 
and  is  a  result  or  consequence,  rather  than  an  element  or 
measure  of  cost,  as  it  is  usually  considered. 

We  may  perhaps  solve  this  problem  by  an  example,  and 
for  this  purpose  a  cotton  fabric  may  best  be  taken,  because 
it  is  an  example  of  production  to  which  the  highest  art  in 
the  application  of  machinery  is  necessary  in  one  department, 
as  well  as  the  lowest-priced  manual  labor,  but  little  aided 
by  machinery  in  another. 

The  elements  of  a  cotton  fabric  are  : 

1st.  Cotton,  including  the  profit  of  the  cotton  farmer, 
the  wages  of  the  cotton  laborer,  and  the  wear  and  tear  of 
the  capital  or  tools  used  in  the  production  of  the  fibre. 

2d.  Other  materials,  which  need  not  be  considered  sepa- 
rately, as  the  same  principles  which  govern  the  supply  of 
cotton  also  govern  these. 

3d.  The  transportation  or  movement  of  the  cotton  to  the 
factory. 

4th.  The  wear  and  tear  or  depreciation  of  the  factory 
resulting  both  from  use  and  from  the  invention  of  better 
machinery. 


THE  RATE  OF  WAGES?  49 

5th.  The  wages  or  earnings  of  those  who  do  the  work. 

6th.  If  taxes  are  levied  upon  machinery,  the  capitalist  will 
also  assure  himself  that  he  can  charge  the  taxes  as  a  part  of 
the  money  cost  of  the  goods  before  he  builds  the  mill,  and 
thus  distribute  them  upon  consumers,  but  they  do  not  of 
necessity  enter  into  this  consideration. 

With  respect  to  cotton,  no  attention  need  be  given  to  any 
assumed  value  of  land  in  the  southern  United  States,  con- 
sidered merely  as  land.  The  area  of  cotton  cultivation  has 
never  yet  equalled  three  acres  in  one  hundred  of  the  area  of 
the  cotton  States,  and  if  the  same  measure  of  intelligence 
were  applied  to  cultivation  in  all  the  States  which  was  given 
to  cotton  production  by  the  late  Parish  Furman,  of  Georgia, 
the  whole  commercial  cotton  crop  of  the  world,  including 
that  of  the  United  States,  India,  Egypt,  and  South  Amer- 
ica, could  be  produced  on  one  fifteenth  part  of  the  area  of 
the  single  State  of  Texas. 

The  price  of  cotton,  therefore,  yields  profits  to  the  farmer 
and  wages  to  the  laborer;  as  time  goes  on,  the  two  are  be- 
coming more  and  more  identified.  The  price  of  the  cotton 
is  determined  by  competition  in  the  great  markets  of  the 
world — in  Liverpool,  Havre,  and  New  York.  When  the  cost 
of  transportation  has  been  set  aside  and  the  profit  of  the  cot- 
ton farmer  has  been  realized  the  remainder  over,  although  it 
is  but  a  small  sum  per  pound,  yet  sufifices  to  pay  the  laborers 
upon  the  cotton  farms  of  the  United  States  the  highest  rate 
of  wages  earned  by  the  cotton  cultivators  of  the  world — a 
far  higher  rate  than  can  be  attained  by  the  ryots  of  India, 
the  fellahs  of  Egypt,  or  the  peons  of  South  America.  The 
purchasing  power  of  the  wages  of  the  negro  of  the  southern 
cotton  field  is  also  very  high  when  measured  by  his  wants; 
he  prefers  bacon  and  corn — **  hog  and  hominy  " — with  a 
little  molasses,  to  any  other  food  ;  his  week's  ration  consists 


50  WffA  T  MAKES 

of  three  and  a  half  pounds  of  bacon  and  one  peck  of  meal, 
and  this  can  be  furnished  him  at  fifty  to  seventy  cents  per 
week,  according  to  the  season  and  to  the  abundance  of  the 
western  crops,  or  at  seven  to  ten  cents  per  day.  The  food 
of  the  rice-fed  races  of  India  costs  less  nominally,  but  if  con- 
sideration be  given  to  the  force  concentrated  in  and  repre- 
sented by  the  food,  there  is  probably  no  other  laboring  force 
in  the  world  which  can  be  subsisted  at  so  low  a  cost,  either 
measured  in  labor  or  in  money,  as  the  freed  negroes  of  the 
South. 

The  price  of  raw  cotton  being  thus  determined,  the  place 
at  which  it  may  be  converted  into  cotton  cloth  must  next 
be  determined.     Into  this  question  many  conditions  enter  : 

1st.  The  use  of  water  or  steam  power. 

2d.  Climatic  conditions. 

3d.  The  density  of  the  population  and  the  capacity  of  the 
separate  members  of  the  population  to  do  the  work. 

4th.  The  proximity  of  the  factory  to  the  market  in  which 
the  principal  demand  exists. 

5th.  The  consuming  power  of  the  community  in  the 
midst  of  which  the  factory  is  placed,  and  their  ability  to 
buy  the  products  for  which  the  cotton  fabrics  made  in 
excess  of  their  own  wants  are  exchanged. 

Omitting  all  consideration  of  fine  cotton  fabrics,  which 
perhaps  depend  upon  the  relative  or  constant  humidity  of 
the  atmosphere  in  the  choice  of  the  place  where  they  are  to 
be  made,  but  which  are  of  little  relative  consequence  in  the 
supply  of  clothing, — and  limiting  our  attention  to  pure  cot- 
ton fabrics  of  heavy  or  medium  weight,  which  constitute  the 
most  important  portion  of  the  supply  of  such  fabrics,  it  ap- 
pears that  the  lowest  cost  of  production  has  been  attained 
in  some  of  the  principal  factories  of  New  England,  of  which 
the  specific  data  are  given  in   the  appendix.     The  fabrics 


THE  RATE   OF    WAGES?  5 1 

hiade  in  these  factories  meet  those  of  other  countries  in 
China,  India,  Africa,  and  South  America,  and  are  there  sold 
in  competition.  The  price  received  has  thus  far  sufficed  to 
defray  the  cost  of  the  materials,  the  transportation  of  the 
cotton  from  the  southern  field  to  the  northern  factory,  the 
heavy  local  taxes,  a  reasonable  rate  of  profit  to  the  owners, 
and  the  remainder  over  has  sufficed  to  give  the  operatives 
the  highest  rate  of  wages  earned  in  this  art  in  any  part  of 
the  world.  Whether  this  superiority  can  be  maintained  by 
New  England  in  competition  with  the  Piedmont  section  of 
the  Southern  States  is  now  considered  an  open  question  by 
some  observers.  In  this  treatise  it  will  suffice  to  call  atten- 
tion to  two  facts  by  which  the  propositions  herein  submitted 
are  fully  sustained. 

1st.  That  in  this  art  the  rate  of  profit  in  a  given  product 
has  steadily  diminished,  and  the  rate  of  wages  (or  of  the  re- 
mainder over)  has  as  steadily  increased. 

2d.  That  in  the  most  important  division  of  this  art,  to 
wit:  the  manufacture  of  coarse  and  medium  fabrics  from 
cotton  unadulterated  with  clay,  the  highest  rate  of  wages 
(or  remainder  over)  is  realized  where  the  cost  of  production 
is  lowest,  i.  e.,  in  New  England. 

In  treating  this  subject  it  matters  not  whether  this  result 
has  been  reached  by  means  of  a  protective  tariff,  or  in  spite 
of  one.  It  is  admitted  that  special  rates  of  wages  in  a  par- 
ticular art  may  be  raised  by  the  exclusion  of  a  foreign 
product  of  like  kind,  so  long  as  the  price  of  the  domestic 
product  is  maintained  above  what  it  would  otherwise  be; 
but  this  is  exceptional.  I  have  selected  examples  of  pro- 
ducts of  which  the  price  is  determined  both  by  domestic 
and  by  foreign  competition,  in  order  that  the  main  question 
may  not  be  confused  by  any  prejudice  for  or  against  any 
special  policy.      Reference    will  be  made  hereafter  to  the 


52  WHA  T  MAKES 

conditions  under  which  the  poHcy  of  protection  may  or  may 
not  be  expedient.  ' 

*  In  this  connection  the  writer  may  venture  to  express  an  opinion  as  to 
the  place  in,  or  section  of,  the  United  States  where  the  cotton  manufacture  will 
be  gradually  concentrated. 

It  has  been  submitted  that  the  most  ample  capital  and  the  most  skilful  labor 
will  tend  to  the  most  favorable  place,  because  at  that  place  the  remainder  over 
of  which  wages  consist  will  be  the  greatest  proportion  recoverable  from  the  sale 
of  the  product. 

Steam  having  substantially  displaced  water  as  the  motive  power  of  the  factory, 
the  climatic  or  atmospheric  conditions  in  which  the  cotton  fibre  can  be  most 
successfully  spun  and  woven  have  become  perhaps  the  most  important  elements 
in  determining  the  place  of  conversion.  In  England  there  is  a  steady  and  con- 
stant trend  of  the  spinning  mills  to  the  points  where  the  deposition  of  moisture 
is  most  uniform,  and  where  the  humidity  of  the  atmosphere  is  most  constant. 
There  is  scarcely  a  spindle  left  in  Manchester  and  there  are  eleven  million  spindles 
in  Oldham,  a  town  which  has  grown  from  insignificance  to  this  importance  in  a 
very  few  years.  It  is  about  800  feet  above  the  level  of  the  sea,  on  the  edge  of 
the  level  moors  at  a  point  where  the  deposition  of  moisture  is  constant.  In 
this  country  it  may  perhaps  happen  that  cotton  spinning  will  be  concentrated 
more  and  more  along  the  coast  of  the  southeastern  part  of  Massachusetts,  in 
Rhode  Island,  and  along  the  coast  of  Connecticut,  where  the  influence  of  the 
Gulf  Stream  is  most  apparent,  and  where  cotton  and  fuel  can  be  laid  down  at  the 
least  proportionate  cost  of  transportation.  It  will  be  observed  that  in  the  annual 
expenses  of  families  living  upon  an  income  of  $500  to  $800  per  year  the  cost  of 
mere  subsistence  is  sixty  per  cent,  of  the  whole  expenditure.  In  the  section 
designated  the  staple  articles  of  western  food — grain  and  meat — can  be  deliv- 
ered at  a  cost  of  $5  per  ton  for  over  1,000  miles  of  distance,  and  one  ton  suffices 
for  a  years'  ration  of  grain  and  meat  for  four  or  five  persons.  On  the  other 
hand,  this  section  has  a  positive  advantage  over  almost  any  other  in  respect  to 
groceries  and  in  the  supply  and  preservation  of  vegetables,  while  its  distance 
from  the  cotton  field  is  fully  offset  by  its  greater  proximity  to  the  principal  mar- 
kets for  goods.  The  colder  climate  of  winter  gives  a  necessary  stimulus  to  in- 
dustry, and  is  more  readily  qualified  than  the  excess  of  heat  in  the  southern 
summer.  Hence  it  may  happen  that  at  this  point,  or  in  this  section,  the 
highest  wages  will  always  be  the  remainder  over  from  the  manufacture  and 
sale  of  staple  cotton  fabrics. 

In  this  section  the  population  will  also  be  likely  to  remain  more  dense,  and 
also  more  capable  of  great  diversity  of  employment  and  subdivision  of  labor. 
These  are  very  important  considerations,  since  the  margin  of  profit  is  becoming 


THE  RATE   OF    WAGES?  53 

• 

Wages  are  held  to  be  a  consequence — a  result — a  remain- 
W  der  over  after  capital  has  received  such  profit  as  will  have 
induced  it  to  undertake  the  work  ;  the  rate  of  wages  cannot 
titer ef ore  be  considered  a  true  measure  of  the  cost  of  pro- 
duction. Wages  are  a  consequent  result,  and  their  measure 
or  rate  is,  and  must  be,  determined,  in  the  long  run,  by 
what  the  product  will  bring,  and  not  by  what  the  capitalist 
may  either  promise  or  be  willing  to  pay  for  a  given  time. 
He  may  not  be  able  to  forecast  the  future  in  such  a  man- 
less  and  less.  It  may  almost  be  said  that  in  all  the  great  arts  the  profit  is  found 
in  the  utilization  of  the  waste  or  of  the  secondary  product  of  the  factory,  and  in 
the  facility  with  which  the  machinery  can  be  kept  up  without  the  necessity  of 
maintaining  a  large  force  of  spare  hands  under  constant  pay.  Hence  the  iso- 
lated cotton  mill,  which  is  far  away  from  the  paper  mill  on  the  one  side  and  the 
machine  shop  on  the  other,  is  at  a  relative  disadvantage  which  tells  against  it  in 
the  close  competition  under  which  a  quarter  of  a  cent  on  the  yard  of  cloth  is 
equal  to  four  or  six  per  cent,  on  the  capital  invested.  This  tendency  of  partic- 
ular arts  to  become  fixed  in  particular  places  calls  for  more  attention  than  has 
yet  been  given  to  it,  in  order  that  the  reasons  may  be  fully  comprehended  and 
their  influence  on  wages  considered. 

It  would  be  a  matter  of  curious  interest  to  study  the  forces  or  influences 
which  made  gloves  the  chief  product  of  Gloversville  in  New  York,  and  gave  the 
town  its  name  ;  why  card  clothing  is  made  chiefly  in  Leicester  and  Worcester, 
Mass.;  why  men's  heavy  boots  are  made  in  Spencer  and  Brookfield,  and 
women's  boots  and  shoes  in  Lynn  ;  why  brass  work  of  certain  kinds  is  con- 
ducted so  largely  and  exclusively  in  a  few  towns  in  Connecticut;  etc.,  etc. 
There  are,  of  course,  very  obvious  reasons  why  primary  work  of  many  kinds 
should  be  found  in  special  places,  but  the  reasons  for  the  concentration  of  sec- 
ondaiy  work  are  not  so  plain,  and  a  study  of  the  causes  might  yield  most  valu- 
able results,  especially  in  their  effect  upon  the  remainder  over  which  makes  the 
rate  of  wages  in  these  arts. 

The  time  has  been  when  fine  cotton  yarn  has  been  spun  in  England,  sent  to 
France  to  be  woven,  to  Germany  to  be  dyed,  and  brought  back  to  England  to 
be  sold.  The  best  flour  of  Minneapolis  is  even  now  in  some  small  measure  sent 
to  London  to  be  baked  into  biscuit,  and  is  brought  back  to  Boston  and  New 
York  to  find  a  market.  If  profits  and  wages  were  not  recovered  from  these 
movements  in  greater  measure,  they  would  not  occur.  What  are  the  subtle 
causes  of  such  commerce  ? 


54  ^^A  T  MAKES 

• 
ner  as  to  be  able  to  carry  out  a  single  promise  which  he  has 
made  in  advance  of  the  sale  of  his  product.  The  sum  but 
not  the  rate  of  the  wages  in  any  given  quantity  of  products 
may  serve  as  a  means  of  comparison  of  the  money  cost 
when  persons  who  are  engaged  in  the  same  branch  of  busi- 
ness desire  to  compare  their  conditions ;  but  the  rates  of 
wages  constitute  no  measure  of  comparison  unless  the  con- 
ditions under  which  the  work  is  done, — that  is  to  say,  unless 
the  quality  and  kind  of  machinery,  the  materials  used,  the 
advantage  of  position,  the  hours  of  labor,  and  other  elements 
of  the  real  cost,  are  absolutely  identical. 

I  have  said  that  in  a  country  which  is  inhabited  by  a 
homogeneous  people,  the  rate  of  wages  will  be  highest  where 
the  conditions  of  production  are  most  favorable,  because  the 
quantity  or  intensity  of  the  labor  will  there  be  least  and  the 
N^ product  will  there  be  greatest.  In  like  manner  when  ex- 
changes are  made  between  two  different  countries,  each 
country  will  exchange  with  the  other  some  portion  of  its 
own  product,  which  it  can  make  under  the  most  favorable 
conditions,  or  in  excess  of  its  own  needs.  The  two  products 
being  each  converted  into  terms  of  money  will  be  exchanged 
as  equivalents,  without  any  regard  to  the  proportion  or 
quantity  of  labor  which  each  represents.  We  may  exchange 
one  day's  labor  in  a  Lowell  factory  in  the  manufacture  of 
drills,  for  one  hundred  days  of  labor  in  China  in  the  prepara- 
tion of.  tea.  It  matters  not  what  the  rate  of  wages  of  the 
Lowell  operative  had  been,  or  what  the  earnings  of  the 
Chinamen  handling  tea  had  been ;  their  product  is  conver- 
ted  into  terms  of  money,  and  is  exchanged  at  certain  prices 
which  represent  a  given  number  of  yards  of  drills  for  a  giv- 
en number  of  pounds  of  tea.  Each  is  an  equivalent  to  the 
other.  No  one  asks  what  the  rate  of  wages  or  the  quantity 
of  labor  in  each  has  been.  The  wages  are  the  result,  not  the 
antecedent, 


THE  RATE   OF    WAGES?  55 

When  the  exchange  is  continued — it  proves  that  each  party 
makes  a  profit  by  the  transaction.  The  Lowell  operative 
could  not  have  produced  the  tea,  the  Chinaman  could  not 
have  produced  the  American  drill ;  when  the  exchange  is 
made,  the  tea  sells  in  America  for  more  than  the  equivalent 
of  the  drill  there,  and  the  drill  sells  in  China  for  more  than 
the  market  price  of  the  tea  there  ;  therefore  there  is  a  cer- 
tain sum  of  money,  or  result  of  labor  expressed  in  terms  of 
money,  to  be  divided  among  the  laborers  in  each  country, 
in  excess  of  what  there  would  have  been  had  not  the  ex- 
change been  made.  The  final  result  of  the  labor  of  the 
Lowell  operative  is  the  number  of  dollars  which  the  tea 
brings,  less  the  cost  of  transportation  ;  that  sum  is  more 
than  the  drills  would  have  brought  at  home,  else  they  would 
not  have  gone  to  China. 

Try  this  on  a  little  larger  scale.  We  now  import  into 
the  United  States,  annually,  materials  which  are  free  of  duty 
to  the  value  of  $ 2 cx), 000,000,  and  we  exchange  for  them,  at 
this  measure  in  terms  of  money,  the  surplus  of  our  cotton 
which  we  could  not  now  spin  ourselves, — the  surplus  of  our 
oil  which  we  could  not  now  burn  ourselves, — and  the  surplus 
of  our  wheat  which  we  could  not  now  eat,  even  if  every  man 
had  every  day  all  the  bread  he  could  possibly  consume. 
What  we  send  out  is  our  surplus,  our  excess,  a  part  of  our 
over-production  which  could  not  be  converted  into  terms  of 
money  at  any  price,  or  which  would  have  reduced  the  price 
of  the  whole  product  if  it  were  retained  ;  if  retained  at  home 
it  would  yield  nothing  to  divide  in  terms  of  money  as  the 
equivalent  of  such  excess,  among  those  who  did  the  work. 
But  the  substances  for  which  we  have  exchanged  this  excess 
having  been  brought  into  the  country  where  they  do  pos- 
sess a  value  of  $200,000,000  or  more,  there  is  that  additional 
sum  to  be  converted  into  terms  of  money  and  subdivided 


$6  WHAT  MAKES 

in  profits  and  wages.  In  the  use  of  this  foreign  material, 
much  of  which  enters  directly  into  the  work  of  domestic 
manufactures,  all  wages  are  therefore,  by  so  much  higher 
than  they  would  have  been  otherwise.  There  is  so  much 
more  to  be  divided  in  terms  of  money,  because  so  much 
has  been  added  to  the  quantity  of  things  which  could  be 
used  ;  while  the  cotton,  oil,  and  wheat  sent  out  from  the 
country  could  not  have  been  used.  Now,  it  matters  not  what 
may  have  been  the  rate  of  wages  paid  in  the  production  of 
the  cotton,  wheat,  or  oil ;  and  it  matters  not  what  may  have 
been  the  rate  of  wages  paid  in  raising  the  wool  of  Australia, 
in  making  the  tea  of  China,  or  in  saving  the  hides  of  South 
America.  We  may  receive  the  work  of  ten  men  for  one 
day  at  twenty  cents  a  day,  for  the  work  of  a  single  man 
working  one  day  for  two  dollars.  By  so  much  as  the 
quantity  of  labor  in  our  exportable  commodities  is  less  than 
the  labor  in  those  which  we  import,  will  the  rate  of  wages 
be  higher  to  our  home  labor  as  the  necessary  result  of  the 
exchange,  because  so  much  additional  substance  has  been 
added  by  import  from  abroad  to  the  quantity  of  things  for 
which  a  home  market  could  be  found.  This  import  has 
been  received  in  exchange  for  home  productions,  for  which 
there  is  no  market,  because  they  are  in  excess  of  home 
wants.  There  can  be  no  continuous  commerce  unless  there 
is  a  continuous  service  or  profit  to  both  parties. 

It  follows  that  the  nation  which  has  diminished  the 
quantity  of  human  labor  in  greatest  measure  by  the  applica- 
tion of  machinery,  produces  goods  at  the  lowest  cost,  and 
by  exchange  with  the  hand-working  nations,  who  still  con- 
stitute the  majority  of  the  people  of  the  world,  are,  by  way 
of  such  exchange,  enabled  to  pay  the  highest  rate  of  wages 
in  money,  because  their  goods  are  made  at  the  lowest  labor 
cost.     This  is  the  secret  of  English  commerce. 


THE  RATE  OF  WAGES?  ^y 

The  rates  of  wages  are  higher  in  England  than  in  any 
country  with  which  she  makes  large  exchanges,  except  the 
United  States.  She  buys  largely  from  us  in  spite  of  our 
higher  wages,  because  by  way  of  high  wages  we  make  grain, 
cotton,  meat,  oil,  and  many  other  articles  necessary  to  her 
use  at  a  lower  cost  in  money  than  any  other  nation. 

Having  thus  attempted  to  present  the  principle  at  issue  in 
this  matter,  let  us  now  consider  its  application.  The  only 
problems  of  any  great  importance  which  are  now  presented 
to  the  people  of  this  country  for  their  determination,  consist 
of  the  various  problems  in  regard  to  the  collection  of  the 
revenue,  to  the  banking  system,  to  the  quality  and  kind  of 
coin  which  shall  be  a  legal-tender  in  the  settlement  of  debts, 
and  other  fiscal  questions.  The  tariff,  the  currency,  the  bank- 
ing system,  and  the  coinage  are  the  only  political  questions 
of  any  moment.  Fortunate  for  us  that  it  is  so,  and  that  we 
are  free  from  the  complications  of  other  countries.  Strange 
it  is,  and  true  it  is,  that  the  most  difficult  political  question 
to  be  dealt  with  by  the  people  of  the  United  States  is,  kow 
to  get  rid  of  a  surplus  revenue. 

Neither  one  of  these  problems  can  even  be  stated  without 
immediate  reference  being  made  to  their  bearing  upon  the 
rates  of  wages  of  the  people  of  this  country. 

Aside  also  from  questions  of  revenue,  banking,  and 
coinage,  the  relations  of  men  to  each  other  cause  discus- 
sion,— the  hours  of  labor,  the  respective  duties  and  rights 
of  employers  and  employed,  competition  and  cooperation, 
and  all  the  other  subjects  which  are  customarily  sum- 
marized under  the  general  term  of  "the  labor  question." 
Not  one  or  all  of  these  questions  can  ever  be  discussed 
without  an  immediate  consideration  of  the  rate  of  wages.  In 
every  speech,  in  every  essay,  and  in  every  conversation  by 
the  way,   upon  any  of  these  subjects,  the   rate  of   wages 


58  WHAT  MAKES 

comes  at  once  to  the  front,  and,  as  a  rule,  one  or  the  other 
of  the  following  propositions  is  almost  invariably  assumed, 
all  of  which  are  the  very  reverse  of  being  true,  and  all  of 
which  are  inconsistent  with  the  law  of  wages  which  I  have 
attempted  to  propound.  All  such  discussion  serves  but  to 
confuse  the  mind,  simply  because  no  distinction  is  made 
between  the  rate  of  wages  and  the  sum  of  wages,  and  be- 
cause it  is  assumed  that  all  laborers  or  operatives  are 
equally    efficient. 

I  again  desire  to  express  the  hope  that  the  form  of 
these  propositions  may  not  prejudice  any  one,  be  he  an 
advocate  of  protection  or  of  free  trade.  The  so-called 
principle  of  laisser  faire  is  by  no  means  implied  in  this  trea- 
tise. The  welfare  of  laborer  and  capitalist  rests  upon  many 
other  conditions  than  the  rate  of  profits  or  wages,  but  the 
forces  which  determine  these  rates  must  be  fully  considered 
before  any  intelligent  discussion  of  any  social  qnestion  can 
be  undertaken.  It  is  to  these  forces  that  I  have  endeavored 
to  limit  this  treatise.  I  will  state  these  fallacious  proposi- 
tions in  order,  as  follows  : 

POPULAR   FALLACY   NO.    I. 

The  cost  of  production  of  any  given  article  can  be  ascer- 
tained by  finding  out  and  comparing  the  rates  of  wages 
paid  in  its  production  in  different  places,  here  or  elsewhere. 

POPULAR   FALLACY    NO.    2. 

Low  rates  of  wages  are  necessary  to  low  cost  of  produc- 
tion ;  high  rates  of  wages  can  only  be  paid  consistently  with 
high  cost  of  production. 

POPULAR   FALLACY    NO.    3. 

Inasmuch    as    laborers     work    for    wages,   wages    enter 


THE  RATE   OF  WAGES?  59 

directly  into  the  cost  of  production,  therefore  cheap  labor 
can  only  be  assured  by  the  payment  of  low  rates  of  wages. 

POPULAR    FALLACY   NO.  4. 

An  employer  must  of  necessity  be  able  to  hire  laborers  at 
low  rates  of  wages  in  order  to  make  goods  at  low  cost. 

Now  if  one  asks  any  employer  which  workman  is  the 
first  one  to  be  discharged  in  a  period  of  depression, — 
the  workman  who,  being  employed  by  the  piece,  earns 
the  lowest  rate  of  wages  for  himself,  or  the  one  who 
earns  the  highest, — unless  some  other  question  than  the 
mere  cost  of  goods  enters  into  his  consideration  he  will 
reply:  *'  Why,  the  poor  workman  will  be  discharged 
first,  of  course, — he  who  earns  the  lowest  rate  of  wages." 
Each  employer  understands  perfectly  well  in  his  own  busi- 
ness that  the  cheapest  man, — that  is,  the  man  who  does  the 
most  work  for  the  least  money  is  the  one  who  works  the 
greatest  amount  of  machinery  with  least  stops,  i.e.,  the  most 
effective  workman  ;  in  manual  labor  it  is  the  strongest ;  in 
a  handicraft  it  is  the  one  who  possesses  the  greatest  manual 
dexterity;  in  the  operation  of  machinery  it  is  the  one  who 
understands  the  machine  best  and  can  get  the  most  work 
out  of  it.  The  very  man  who  may  have  taken  part  in  a  dis- 
cussion in  which  he  has  assumed  that  the  popular  fallacies 
which  I  have  recited  are  unanswerable  truisms,  will  never 
conduct  his  own  business  consistently  with  them,  and  if  he 
did  he  would  be  sure  to  fail  sooner  or  later. 

The  true  cost  of  any  given  article  is  the  quantity  of  labor 
or  the  human  effort  expended  in  its  production ;  now,  if  we 
consider  a  human  being  as  an  automatic  machine,  similar  to 
any  other  mechanical  power  or  force,  the  true  cost  is  the 
quantity  of  food  and  fuel  expended  in  the  conversion  of  a 
given    amount    of   material    substance    into   human    force. 


60  WHAT  MAKES 

How  true  this  is  has  been  proved  by  Brassey  in  his  coi 
parison  of  the  cost,  even  in  money,  of  the  labor  of  the 
English  navvy  as  compared  to  the  Hindoo  or  any  other  of 
the  rice-fed  people  of  the  world.  This  human  effort  is 
measured  or  converted  into  terms  of  money,  and  it  is  the 
sum  of  the  wages,  not  the  rat e^  which  constitutes  the  money 
costj_  to  this  sum  the  rate  of  wages  may  bear  a  large  or  a 
small  proportion.  Wages  in  money  are  the  instrumentalities 
for  procuring  food,  fuel,  and  shelter  ;  and  the  worker  is 
practically  the  more  effective,  the  more  money  he  can  earn, 
or,  in  other  words,  the  more  money  he  can  spend  in  a  judi- 
cious manner  for  a  good  subsistence.  The  English  navvy 
may  be  instanced  again  as  being  worth  twice  as  much, 
either  in  the  measure  of  his  work,  or  by  converting  the 
measure  of  his  work  into  wages,  as  the  rice-fed  coolie.  He 
earns  more,  he  spends  more,  he  eats  more,  and  he  does  more 
than  double  the  work.  Therefore,  although  he  attains  a 
high  rate  of  wages,  the  result  of  his  labor  will  be  a  lower 
cost  of  production.  Again,  the  skilful  weaver  who  can 
tend  six  looms,  and  keep  each  loom  moving,  being  paid 
by  the  piece  or  according  to  the  quantity  of  cloth  woven, 
earns  higher  wages  than  the  unskilful  weaver  who  only 
tends  four  looms,  and  has  one  stopped  a  large  part  of  the 
time ;  the  sum  of  the  wages  of  the  six-loom  weaver  is  the 
least  in  proportion  to  the  quantity  of  cloth  produced.  The 
high  wages  represent  the  low  cost. 

Not  very  long  since,  a  German  steamer,  on  the  way  to 
New  York,  was  very  much  damaged,  so  that  very  extensive 
repairs  became  necessary.  It  was  decided  to  do  the  work 
of  repairing  in  New  York,  as  it  appeared  diflficult  to 
send  her  back  to  Bremen  ;  but  the  agents  were  instructed 
to  report  in  Bremen,  day  by  day,  the  number  of  men 
employed    and    the    rates    of    wages;  which    report    they 


THE  RATE   OF  WAGES?  6l 

made.  When  the  first  report  was  received  in  Bremen,  a 
telegraphic  message  was  returned,  ordering  the  steamer 
back  to  Bremen  for  the  completion  of  the  repairs,  for  the 
reason  that  the  owners  of  the  line  said  that  they  could  not 
afford  to  pay  such  high  rates  of  wages,  being  well  assured 
that  the  cost  of  repairs  would  be  more  than  what  they  would 
of  necessity  expend  in  Bremen.  But  it  was  too  late  ;  the 
work  had  been  begun  and  it  was  necessary  to  finish  it  in 
New  York.  When  the  final  account  of  the  sum  of  wages 
was  sent  to  Bremen,  it  proved  to  be  a  less  amount  than  the 
same  repairs  would  have  cost  in  Bremen.  Since  then  there 
has  been  no  reluctance  to  repair  these  German  steamers  in 
New  York. 

Again,  the  rates  of  wages  may  be  precisely  the  same  in 
two  factories  in  the  same  place,  and  yet  the  cost  of  produc- 
tion will  vary  so  much  that  one  mill  will  prosper  while  the 
other  will  fail,  because  the  quantity  of  product  will  vary,  and 
the  profit  or  loss  of  any  textile  factory  rests  mainly  upon 
the  quantity  of  yarn  spun  and  of  the  goods  woven.  There 
may  be  many  reasons  for  this  difference  :  in  one  mill  the 
machinery  may  be  old,  in  the  other  new  ;  in  one  the  mate- 
rial may  be  well  selected,  in  the  other  badly  ;  in  one  the 
goods  may  be  well  sold,  in  the  other  badly  sold  ;  in  one  the 
goods  may  meet  the  fashion,  in  the  other  they  may  be  out 
of  date,  although  better  in  quality.  Under  all  these  vary- 
ing conditions,  the  source  of  wages  being  the  money  pro- 
duced by  the  sales,  high  wages  may  have  been  paid  consis- 
tently with  low  cost  of  production  in  one  factory  ;  and  low 
wages  may  have  been  paid,  notwithstanding  the  high  cost 
of  production,  in  the  other ;  or,  if  the  cost  of  production  be 
the  same,  the  goods  of  one  mill  being  well  sold  and  those  of 
the  other  ill  sold,  the  sum  left  to  be  divided  might  amply 
suffice  for  high  profits  and  wages  in   the  one  case,  and  be 


62  WHA  T  MAKES 

deficient  in  the  other.  Thus,  difference  in  management 
will  alter  results,  in  the  same  place,  at  the  same  time,  in 
the  use  of  similar  machinery.  The  same  management  will 
yield  different  results,  both  in  profits  and  wages,  on  dif- 
ferent machinery.  The  same  management  and  similar 
machinery  will  yield  high  wages  in  one  place,  and  the 
reverse  in  another,  at  the  same  time,  because  the  condi- 
tions vary  in  other  respects. 

I  have  submitted  these  several  propositions  under  the 
name  of  popular  fallacies.  It  will  be  apparent  that  a  very 
large  part  of  the  discussions  in  respect  to  hours  of  labor,  in 
respect  to  taxation,  and  to  all  other  matters  connected  with 
the  so-called  labor  question,  are  commonly  based  upon  them, 
and  the  common  conclusions  are  as  fallacious  as  the  propo- 
sitions. 

A  true  theory  of  the  source  of  wages  and  their  actual  re- 
lation to  productive  industry  is  therefore  necessary  to  any 
intelligent  discussion  of  any  of  the  questions  now  before 
the  country. 

The  wage  question  must  be  treated  from  four  points  of 
view. 

First. — What  individual  effort  is  required  to  earn  a  given 
sum  of  money  in  a  given  time  ? 

Second. — What  is  the  purchasing  power  of  that  money  ? 

Third. — What  are  the  relative  efforts,  as  well  as  relative 
sums  of  money  earned  in  the  form  of  wages,  by  those 
who  compete  in  a  given  product  in  the  same  or  in  different 
countries  ? 

Fourth. — What  is  to  be  considered  in  addition  to  the  cost 
of  materials  and  the  rate  of  wages,  in  placing  the  goods  pro- 
duced at  the  point  of  consumption  ? 

The  fallacies  which  have  been  previously  submitted  may 
be  met  by  counter  propositions,  all  of  which  can  be  sub- 


THE  RATE   OF  WAGES?  63 

stantially  sustained  ;  exceptions  being  readily  designated, 
and  the  reason  for  such  exceptions  being  readily  found. 

First. — The  rate  of  wages  constitutes  no  standard  even  of 
the  money  cost  of  production ;  which  cost  must  be  made  up 
by  adding  together  the  sum  of  all  wages  and  dividing  by 
the  product,  in  order  to  establish  a  unit  of  cost  in  money 
by  way  of  a  unit  of  measure — whether  by  the  yard,  barrel, 
or  pound. 

Second. — Low  rates  of  wages  are  not  essential  to  a  low 
cost  of  production,  but  on  the  contrary  usually  indicate  a 
high  cost  of  production, — that  is  to  say,  a  large  measure  of 
human  labor  and  a  large  sum  of  wages  at  low  rates.  Con- 
versely, high  rates  of  wages  may,  and  commonly  do,  indi- 
cate a  low  cost  of  production, — that  is  to  say,  a  small 
proportion  of  human  labor  and  a  small  proportionate  sum 
of  wages  at  high  rates  in  a  given  quantity  of  product. 

Third. — Cheap  labor,  in  a  true  sense,  and  low  rates  of 
wages  are  7iot  synonymous  terms,  but  are  usually  quite  the 
reverse. 

Fourth. — An  employer  is  not  under  the  necessity  of  se- 
curing labor  at  low  rates  of  wages  in  order  to  make  cheap 
goods,  but  he  may  and  commonly  does  pay  high  rates  of 
wages,  for  the  very  purpose  of  assuring  the  production  of 
goods  at  the  lowest  cost, — that  is,  in  order  to  be  able  to  sell 
them  on  the  lowest  terms,  or  "  cheap  "  in  the  popular  sense. 

The  abuse  of  the  word  cheap  leads  to  more  mischievous 
fallacies  than  any  other  abuse  of  language.  The  cheapest 
labor  is  the  best-paid  labor  ;  it  is  the  best-paid  labor  applied 
to  machinery  that  assures  the  largest  product  in  ratio  to 
the  capital  invested. 

If  these  propositions  can  be  sustained,  it  may  be  submitted 
that  the  more  the  capitalist  increases  his  wealth  and  applies 
it  to  reproduction,  the  more  the  welfare  of  the  laborer  is 


64  WHAT  MAKES 

assured.  The  competition  of  capital  with  capital  tends 
constantly  to  a  decrease  in  the  ratio  of  the  profit  of  capital 
to  the  total  production,  and  of  necessity  tends  also  to  a  con- 
stant increase  in  the  rate  of  wages  of  the  laborer;  thereby 
more  than  counteracting  the  tendency  of  the  competition  of 
laborer  with  laborer  to  diminish  wages. 

I  will  now  attempt  to  prove  these  apparently  paradoxical 
propositions  by  one  of  many  examples  by  means  of  which  this 
theory  can  be  sustained.  It  will  be  taken  from  the  records  of 
the  cotton  manufacture,  not  only  because  this  branch  of  indus- 
try is  most  familiar  to  myself,  but  because  it  was  almost  the 
first  of  those  which  were  brought  under  the  factory  system 
by  division  of  labor,  and  under  this  system  factory  accounts 
have  been  kept  in  the  same  way  from  the  very  beginning. 

In  1830,  when  the  first  statistics  in  my  possession  are 
dated,  the  average  earnings  of  all  the  operatives  in  a  large 
cotton-mill,  who  then  worked  thirteen  hours  or  more  a  day, 
and  among  whom  were  comprised  a  much  larger  proportion 
of  men  than  at  the  present  time,  while  the  women  were 
older  and  there  were  fewer  children,  were  $2.50  to  $2.62  per 
week.  The  quantity  of  machinery  which  each  hand  could 
tend  was  much  less  ;  the  production  of  each  spindle  and 
loom  was  less ;  the  cost  in  money  of  the  mills  per  spindle 
or  loom  much  greater,  while  the  price  of  cloth  was  at  times 
more  than  double  the  price  at  which  it  can  now  be  sold 
with  a  reasonable  profit.  The  average  earnings  of  all  the 
female  operatives  in  what  purports  to  be  the  same  factory, 
at  the  present  time,  on  the  same  fabric,  working  ten  or 
eleven  hours  a  day,  under  vastly  better  sanitary  conditions, 
both  in  the  factory  and  in  their  dwelling-houses,  are  $5  per 
week,  and  in  some  cases  even  $6 — or  more  to  the  most  skil- 
ful. That  is  to  say,  women  only  now  earn  about  twice  as 
much  in  ten  hours  as  men  and  women  combined  averaged 


THE  RATE   OF    WAGES?  65 

in  thirteen  hours  a  little  over  forty  years  ago/  Between 
these  two  dates,  subject  to  various  fluctuations  from  tem- 
porary causes,  the  course  of  events  in  this  branch  of  indus- 
try has  been  as  follows :  A  continuous  reduction  in  the 
hours  of  labor,  coupled  with  an  increase  in  the  earnings  per 
hour  ;  a  diminution  in  the  money  value  of  the  machinery, — 
that  is,  in  the  ratio  of  capital  to  production,  coupled  with 
an  increase  in  its  productive  efificiency ;  a  constant  increase 
in  the  supply  of  cotton  fabrics  per  capita,  coupled  with  a  de- 
crease in  the  price ;  a  continuous  increase  in  the  purchasing 
power  of  gold  dollars  in  respect  to  almost  all  articles  of 
necessary  subsistence,  a  few  articles  only  having  advanced 
in  price,  mainly  meat  and  timber. 

In  all  these  points  the  cotton  manufacture  is  not  excep- 
tional, but  the  same  facts  can  be  proved  in  respect  to  all 
other  branches  of  industry  where  the  accounts  have  been 
kept  upon  a  uniform  system.' 

After  making  all  necessary  corrections  in  the  data  respect- 
ing cotton  fabrics,  on  account  of  the  variations  in  the  price 
of  raw  cotton,  it  therefore  appears  that  the  apparently 
paradoxical  propositions  which  I  have  submitted — the  re- 
verse of  those  which  are  commonly  accepted — are  fully 
sustained. 

First. — The  rate  of  wages  paid  has  not  been  a  true  meas- 
ure of  the  cost  of  production. 

Second. — The  lowest  rates  of  wages  have  been  paid  when 
the  cost  in  money  was  the  highest,  and  the  highest  rates  of 
wages  are  now  paid  when  the  cost  in  money  is  lowest. 

Third. — Low  wages  and  cheap  labor  have  not  been  sy- 
nonymous terms.  That  labor  has,  in  fact,  proved  to  be 
cheapest  by  which  the  largest  product   for  each  dollar  ex- 

^  See  appendix.     Graphical  statement  of  two  factories. 
'  Appendix. — Wages  of  various  kinds  compared. 


(£  WHAT  MAKES 

pended  was  assured,  and  that  has  been  the  highest  paid 
labor. 

Fourth. — The  employer  has  not  been  under  the  necessity 
of  paying  low  v;ages  in  order  to  make  low-priced  goods. 
The  goods  now  made  at  the  rate  of  $5  to  $6  per  week  being 
sold  at  less  than  one  half  the  price,  in  many  instances,  of 
those  which  were  formerly  made  at  the  rate  of  $2.50  to  $2.62 
per  week.  Not  only  is  the  capital  in  the  cotton-mill  now 
less  than  one  half  wh^t  it  was  in  1830  even  when  measured 
in  terms  of  money,  in  ratio  to  the  value  of  the  product,  but 
the  average  rate  of  profit  which  capital  now  rests  satisfied 
with  is  less  than  half  on  each  dollar  invested  what  it  was  in 
1830.  Hence  the  competition  of  capital  with  capital  has  in- 
creased the  quantity  of  cotton  cloth  at  a  decreased  rate  of 
profit.  On  the  other  hand,  the  competition  of  labor  with 
labor  has  not  prevented  the  continuous  rise  in  the  rate  of 
wages,  and  these  wages  have  more  than  doubled  in  the  pur- 
chasing power  of  each  dollar,  by  comparison  with  the  cotton 
cloth  in  the  making  of  which  they  have  been  earned.  In 
respect  to  some  kinds  of  cotton  cloth,  such  as  printed  cali- 
coes, the  actual  weekly  wage  of  to-day  will  buy  four  or  five 
times  as  much  as  the  weekly  wage  of  forty  years  ago.  In 
this  branch  of  industry,  at  least,  all  interests  have  thus  been 
harmonious.  The  increase  of  wealth  in  the  cotton  manu- 
facture has  been  accompanied  by  a  yet  greater  increase  in 
the  welfare  of  the  cotton  operative,  while  both  have  been 
accompanied  by  a  vastly  greater  supply  of  cotton  fabrics, 
and  by  their  increased  consumption  at  lower  and  lower 
prices. 

These  data  have  been  compiled  from  the  accounts  of  cer- 
tain factories  which  have  never  become  bankrupt — whose 
stock  has  never  been  reduced  in  its  par  value,  and  which 
have  paid    a  fair   average  dividend    to  their  stockholders. 


THE  RATE   OF    WAGES?  6/ 

from  time  to  time,  since  they  were  established  to  the 
present  day.  I  have  taken  as  examples  coarse  fabrics,  the 
common  wear  of  the  million.  During  this  period,  from  1830 
to  1884,  this  branch  of  industry,  like  all  others,  has  been  sub- 
jected  to  over  thirty  changes  in  the  tariff ;  to  the  suspension 
of  specie  payments  in  1837  and  1857,  brought  about  by 
purely  commercial  crises  ;  to  the  suspension  of  specie  pay- 
ments at  the  beginning  of  the  war,  brought  about  by  the 
imposition  of  the  Legal-Tender  Act ;  to  a  variation  in  the 
price  of  cotton  from  five  cents  a  pound  to  $1.83  per 
pound  ;  to  the  weary  depression  from  1873  to  1879  '•>  ^^ 
several  minor  commercial  crises.  They  have  also  been  sub- 
jected to  numerous  acts  of  interference  on  the  part  of  the 
State  Legislature  in  the  conduct  of  their  affairs.  If  con- 
stant vacillation  and  change  in  acts  of  legislation,  in  respect 
to  the  tariff,  currency,  banking,  bankruptcy,  taxation,  hours 
of  labor,  and  other  acts  which  are  now  deemed  of  present 
permanent  interest  to  legislators,  could  have  killed  these 
establishments,  they  would  have  long  since  been  very  dead. 
May  not  this  prove  that  we  depend  much  less  upon  gov- 
ernments and  upon  statutes  than  we  think  we  do?  We  are 
almost  forced  to  accept  the  dogma  of  Buckle,  that  the 
greatest  service  of  modern  legislators  is  to  repeal  the  ob- 
structive statutes  of  their  predecessors. 

The  same  progress  and  improvement  in  the  condition  of 
the  operative  have  occurred  in  England  during  the  same  peril 
od  ;  only  the  change  has  been  greater  there  than  it  h.3 
been  here,  because  the  English  operatives  started  from  a 
much  lower  plane  and  have  now  nearly  attained  an  equality 
with  the  condition  of  our  own  in  many  departments. 

We  may  now  recur  to  the  question.  What  makes  the  rate 
of  wages?  In  other  words.  Why  are  the  average  wages  ex- 
pressed in  terms  of  money  in  the  same  factory  nine  to  ten 


68  WHAT  MAKES 

cents  an  hour  to-day,  against  three  and  a  half  to  four  cents 
an  hour  forty  or  fifty  years  ago,  while  the  rate  of  interest  or 
profit  on  capital,  when  invested  in  the  safest  possible  securi- 
ties, is  now  only  three  to  four  per  cent,  against  six,  eight, 
or  even  ten  per  cent,  then? 

In  order  to  bring  out  the  point  of  this  argunnent  with  yet 
greater  clearness,  having  already  compared  one  period  of 
time  with  another  in  the  same  factory,  we  may  now  com- 
pare one  mode  of  work  in  this  art  with  another  in  the  same 
country  in  two  different  places,  to  wit :  Let  us  compare  the 
homespun  fabric  of  Western  North  Carolina  with  the  fac- 
tory cottons  of  New  England.  It  is  computed  by  men  who 
have  had  much  experience,  and  whose  observations  are  en- 
titled to  credence,  that  there  are  two  or  three  million  persons 
living  in  the  heart  of  the  United  States,  in  the  mountain  sec- 
tion of  the  South,  who  are  still  clad  in  homespun  fabrics  of 
cotton  and  of  wool.  I  have  myself  been  among  them,  and 
have  examined  the  conditions  of  the  art  of  making  cotton 
goods  as  it  there  exists.  Two  carders  working  with  hand 
cards,  two  spinsters  operating  spinning-wheels,  one  weaver 
working  a  hand-loom — five  adult  persons  in  all — convert  four 
to  five  pounds  of  cotton  into  eight  yards  of  cloth  in  ten 
hours  ;  the  cloth  is  heavy,  rough,  and  unsightly,  very  durable, 
and  worth  in  the  neighborhood,  when  sold,  about  twenty 
cents  a  yard.  If  the  value  of  the  cotton  be  deducted,  the 
five  persons  might  possibly  earn  twenty  cents  a  day,  the 
total  value  of  this  product  being  $i.6o.  The  capital  inves- 
ted in  the  hand  machine  can  hardly  be  computed,  because 
the  only  thing  purchased  would  have  been  the  two  hand- 
cards  ;  but  if  the  hand  labor  expended  in  the  construction 
of  the  spinning-wheels  and  hand-looms  were  computed  in 
money,  the  whole  investment  might  come  to  $ioo.  The 
proportion  of  capital  used,  in  its  ratio  to  the  annual  product, 


THE  KATE   OF    WAGES?  69 

would  therefore  be  very  small,  and  the  ratio  of  labor,  even 
at  twenty  cents  a  day,  be  very  large.  In  New  England, 
$5,000  worth  of  capital,  operated  by  five  persons,  male  and 
female,  averaging  each  one  dollar  per  day  in  wages, 
will  suffice  for  the  conversion  of  three  to  five  hundred 
pounds  of  cotton  into  eight  hundred  yards  of  the  same  kind 
of  coarse  cotton  cloth ;  the  cloth  softer,  more  sightly,  and 
not  quite  as  durable ;  when  sold  as  low  as  even  seven  or 
eight  cents  a  yard,  yielding  money  enough  to  pay  for  the  cot- 
ton and  other  materials,  profit  enough  to  pay  ten  per  cent, 
on  the  capital,  and  yet  leaving  as  the  result  for  the  wages  of 
the  operatives  one  dollar  a  day  as  their  share  of  the  product. 
Between  these  two  extremes  every  phase  of  the  progress  of 
a  century  in  the  art  of  cotton-spinning  and  weaving  can  even 
now  be  observed,  in  a  journey  of  a  week,  from  Boston  to 
North  Carolina  and  back.  The.  small  mill,  like  that  of  1828, 
fitted  with  old,  heavy,  slow-moving  machinery,  still  exists, 
in  which  twice  or  thrice  as  many  Southern  operatives,  work- 
ing thirteen  hours  a  day,  at  two  thirds  the  rate  of  earnings 
made  in  Lowell,  get  off  a  less  product  of  cloth  at  a  far  higher 
cost.  As  we  journey  back  toward  the  North,  the  mill  be- 
comes larger  and  more  effective,  until  we  arrive  at  the  great 
factories  in  New  England,  where  the  highest  wages  are 
paid  and  the  lowest  cost  of  production  is  assured.  The  same 
or  even  greater  extremes  may  be  found  by  comparing  India 
and  China  with  England;  while  the  cotton-mills  of  England, 
when  compared  with  the  factories  of  Germany  and  Italy,  al- 
though the  machinery  may  have  been  made  by  the  same 
makers,  yet  show  the  same  rule — a  larger  number  of  per- 
sons, less  effective  work,  lower  rates  of  wages,  and  higher 
cost,  as  we  go  away  from  England  to  Germany,  to  Austria 
and  to  Italy. 

It  would  therefore   appear  that  wages  are  a  remainder 


*J0  WHAT  MAKES 

over  from  the  sale  of  the  product,  and  are  determined  by  the 
sum  of  money  which  that  product  will  bring  in  the  markets 
of  the  world.     From  this  sum  of  money  must  be  assigned  : 

First. — A  portion  or  sum  sufficient  to  restore  the  depreci- 
ation of  the  capital  used, — in  other  words,  to  keep  the 
machinery  in  effective  condition. 

Second. — A  sum  equal  to  the  average  rate  of  profit  on 
capital  invested  in  the  very  safest  securities,  and,  in  addition 
to  that  rate,  as  much  more  as  is  necessary  to  compensate 
the  owner  for  the  greater  risk  of  one  branch  of  work  as  com- 
pared with  another. 

Third. — The  cost  of  the  materials. 

Fourth. — The  sum  needed  to  secure  the  very  best  ad- 
ministration. 

Fifth. — The  proportion  of  the  national.  State,  and  munici- 
pal taxes  which  are  collected  from  the  consumers  of  the 
goods  through  the  instrumentality  of  the  person  ,  firm,  or 
corporation  owning  the  property  ;  which  taxes  enter  into 
the  money-cost  of  the  product  and  must  be  recovered  from 
the  sales. 

Lastly. — The  remainder  over  constitutes  the  wages  or 
earnings  of  the  laborer,  whatever  that  remainder  may  be. 

Profits,  taxes,  and  wages  are  therefore  alike  derived  from 
the  sale  of  the  joint  product  of  capital  and  labor. 

Unless  one  branch  of  industry  yields  the  average  of  all 
branches,  due  regard  being  given  to  the  greater  or  less  risk 
of  each  as  compared  with  the  other,  it  will  not  be  under- 
taken ;  or,  if  undertaken,  it  will  not  long  continue  to  be  pur- 
sued. Wages  therefore  are  apparently  deferred  to  profits  ; 
but,  on  the  other  hand,  wages  constitute  all  that  there  is  left, 
and  under  the  inexorable  law  of  competition  of  capital  with 
capital,  the  profits  of  capital  are  constantly  tending  to  a 
minimum,  while  the  rate   and   purchasing  power  of  wages 


THE  RATE   OF    WAGES?  7 1 

are  both  constantly  tending  to  a  maximum.  Capital  is  al- 
ways ready  to  take  the  risk  and  to  become  the  guaranty  or 
insurance  fund  for  the  recovery  from  sales  of  goods  of  higher 
and  higher  wages  for  any  kind  of  skilled  labor  which  is 
capable  of  increasing  the  product  of  any  given  quantity  of 
machinery.  From  the  sale  of  this  increased  product,  in  the 
first  instance,  capital  gains.  More  of  the  same  machinery 
is  then  added,  and,  as  it  becomes  greater  in  quantity  and 
more  effective  in  use,  the  rate  of  profits  diminishes,  although 
the  aggregate  may  increase  ;  in  other  words,  capital  secures 
a  less  and  less  proportion  of  the  constantly  increasing  result, 
while  labor  receives  all  that  there  is  left  over.  That  is,  the 
remainder  over  is  constantly  becoming  a  larger  and  larger 
proportion  of  an  increasing  product.  There  are  of  course 
temporary  fluctuations;  but  both  observation  and  experi- 
ence, combined  with  statistics,  confirm  this  rule  both  in  this 
country  and  in  England.  In  other  words,  the  rule  laid  down 
by  Bastiat  is  sustained  by  experience;  the  aggregate  profit 
of  capital  is  augmented  but  the  relative  profit  is  diminished 
while  the  wage  of  labor  is  increased  both  absolutely  and 
relatively. 

I  had  been  engaged  in  this  examination  and  compilation 
before  I  even  knew  that  Mr.  Robert  Giffen  was  engaged  in 
the  same  work.  His  results  and  my  own,  covering  a  period 
of  fifty  years,  are  identical. 

Having  thus  attempted  to  answer  the  general  question, 
What  makes  the  general  rate  of  wages?  now  let  us  give  a 
few  moments  to  the  particular  question,  What  makes  the 
rate  of  wages  higher  in  this  than  in  any  other  country?  In 
order  to  give  an  intelligent  reply  to  this  question,  we  must 
treat  the  annual  product  of  the  United  States  as  a  whole, 
and  consider  only  the  general  rate  of  wages  in  this  country. 
In  some   particular   branches  of   manufacture,  or  in  some 


72  WHA  T  MAKES 

hereditary  or  national  arts,  other  nations  may  still  apply 
machinery  more  effectively  than  we  do ;  and  in  some  special 
branches  of  agriculture,  such  as  wine,  olives,  sugar,  and  the 
like,  other  countries  may  either  possess  better  conditions 
or  for  the  time  being  greater  skill.  On  the  whole,  however, 
the  people  of  the  United  States  are  in  the  possession  of 
more  ample  and  varied  natural  resources,  and  of  the  most 
effective  capital  in  the  form  of  machinery  ;  they  are  also 
endowed  with  greater  facility  in  the  adaptation  of  machinery 
both  to  agriculture  and  to  manufacturing ;  they  possess  more 
effective  mechanical  instrumentalities  of  distribution  by 
rail  and  river  ;  they  enjoy  a  continental  system  of  unrestricted 
commerce  between  the  States;  they  have  a  fairly  complete 
system  of  common  education  ;  but  lastly,  they  are  subjected 
to  the  least  diversion  of  any  part  of  their  annual  product  to 
purposes  of  destructive  taxation^ — that  is,  to  the  support 
either  of  standing  armies  or  of  privileged  classes.  I  do  not 
recite  our  advantages  in  a  boastful  way  but  in  order  merely 
to  bring  out  the  salient  point,  that  while  other  Nations  prepare 
for  War  we  prepare  for  Work. 

Our  only  great  war  has  been  fought  in  the  interest  of 
labor — in  order  that  labor  might  be  free.  It  gave  such  an 
incentive  to  invention  in  the  North  that  all  our  principal 
crops  increased  during  this  period  even  though  a  million 
men  were  taken  away  from  their  work.  It  opened  the  way 
for  the  Southern  States  to  such  conditions  that  the  South 
itself  is  to-day  richer  and  more  prosperous  than  in  the  palmi- 
est days  of  slavery. 

Our  national  debt  in  1866  was  $83  per  head  of  population. 
It  is  now  but  $25  per  head,  and  will  soon  be  wholly  paid. 

When  two  simple  principles  shall  have  become  a  part  of 
the  common  knowledge  of  the  people  of  the  United  States, 
the  end  of  all  standing  armies  in  the  civilized  nations  of 
the  world  will  have  come. 


THE  RATE  OF   WAGES?  73 

These  two  principles  are  : 

First, — All  nations  are  interdependent,  and  in  all  com- 
merce both  parties  gain  in  welfare. 

Second. — In  all  arts  which  are  not  mere  handicrafts  high 
wages  in  money  are  the  necessary  result  of  low  cost  of  labor 
of  production. 

In  the  grand  competition  for  the  commerce  of  the  world 
which  now  turns  on  a  cent  a  bushel,  a  quarter  of  a  cent  a 
yard,  or  a  fraction  of  a  penny  on  a  pound  of  iron  or  steel, 
no  nation  which  bears  the  burden  of  standing  armies  like 
those  of  Germany,  France,  Italy,  Austria,  and  Russia,  can 
hope  to  enter  into  successful  competition  with  England  or 
the  United  States,  when  the  whole  English-speaking  people 
take  advantage  of  their  position  and  serve  the  nations  of 
the  world  with  goods  at  low  cost,  in  which  all  who  have 
joined  in  the  work  have  made  higher  wages  than  can  be 
earned  in  any  of  the  countries  named.  The  commerce  of 
the  army-burthened  nations  with  others  will  be  destroyed 
by  its  own  restrictions.  Nations  can  only  be  ruined  by 
their  own  burdens; — then  what  may  come?  Their  own  re- 
sources will  not  suffice  to  sustain  their  armies,  but  with  the 
burden  of  their  armies  upon  them  they  cannot  engage  in 
competition  with  England  or  America;  their  product  will 
be  small  and  insufficient  ;  their  wages  very  low  in  their 
rate,  barely  capable  of  buying  enough  to  sustain  life — if 
even  for  that, — while  their  cost  of  production  as  a  whole 
must  be  very  high. 

It  is  difficult  to  foresee  the  course  of  events.  These  ar- 
mies are  as  impossible  to  be  disarmed  as  they  are  incapable 
of  being  sustained,  without  revolution  and  destructive  war. 
What  will  be  the  end  no  man  can  tell ! 

In  contrast  with  these  adverse  and  costly  conditions,  the 
English-speaking  people  may  well  rejoice  in  the  relative  free- 


74  ^^A  T  MAKES 

dom  of  Great   Britain   and   the   absolute   freedom  of   the 
United  States. 

In  addressing  the  British  Association  it  may  not  be  un- 
suitable to  call  attention  to  the  position  of  the  United 
States,  provided  it  is  not  done  in  a  boastful  spirit.  In  deal- 
ing with  the  potentialities  of  the  future  it  is  almost  impos* 
sible  to  prevent  the  imagination  from  running  riot,  but  since 
the  Chairman  of  our  Section,  Sir  Richard  Temple,  has 
spread  before  you  in  his  address  the  magnificent  picture  of 
the  British  Empire,  I  may  perhaps  be  permitted  to  dwell 
upon  the  resources  of  the  United  States,  and  by  analogy, 
of  Canada  also,  in  a  few  paragraphs.  With  respect  to 
my  own  country,  I  may  venture  to  say  that  in  addition  to 
the  advantages  I  have  recited  our  taxes  are,  on  the  whole 
constructively  expended.  The  necessary  result  ensuing 
from  our  conditions  is  a  larger  annual  product  in  ratio  to  the 
number  of  persons  employed  in  making  it,  measured  either 
by  quantity,  or,  when  brought  into  competition  with  the 
world,  by  price  or  the  sum  of  money  which  is  received  for 
it,  than  can  be  elsewhere  attained.  It  is  also,  as  a  rule,  of 
better  quality,  because  of  the  more  intelligent  methods  ap- 
plied to  its  production.  If  we  consider  production  as  a 
whole,  our  annual  product  comes  into  competition  for  sale, 
with  other  products  of  the  world  of  like  kind,  and  its  price 
as  a  whole,  is  determined,  directly  or  indirectly,  by  this 
world-wide  competition.  From  this  determination  of  its 
price,  its  value  is  converted  into  terms  of  money.  Quantity 
and  quality  alike  tend  to  increase  the  sum  of  money  recov- 
ered from  the  sale,  and  this  sum  of  money  is  the  sum  which 
is  to  be  divided  between  capital  and  labor.  Large  general 
profits  and  high  general  rates  of  wages  are  the  necessary 
result. 

It  is  therefore  proved  to  have  been  absolutely  true  in 


THE  RATE   OF    WAGES?  J^5 

this  country  that,  in  proportion  to  the  increase  of  capital, 
the  absolute  share  of  the  value  of  the  annual  product  falling 
to  capital  has  been  augmented,  but  its  relative  share  has 
been  diminished ;  while,  on  the  other  hand,  the  share  that 
has  fallen  to  labor  has  been  increased,  both  absolutely  and 
relatively.  The  generally  high  rate  of  wages,  expressed  in 
terms  of  money,  in  the  United  States,  is  the  necessary  con- 
sequence or  result  of  the  generally  low  labor  cost  of  produc- 
tion,— that  is,  of  the  smaller  quantity  of  labor  by  which  the 
production  is  assured  ;  which  less  quantity  of  labor  suffices 
because  of  the  application  of  the  most  effective  machinery, 
i.  e.y  of  capital,  to  the  work. 

Let  me  give  two  or  three  salient  examples  proving  this 
rule.  Man  does  not  live  by  bread  alone,  but  bread  is  the 
staff  of  life.  What  people  gain  their  bread  with  so  little 
exertion  of  human  labor  as  the  people  of  this  country?  If 
we  convert  the  work  done  in  the  direction  of  machinery 
upon  the  great  bonanza  farms  of  far  Dakota  into  the  yearly 
work  of  a  given  number  of  men,  we  find  that  the  equivalent  in 
a  fair  season,  on  the  best  farms,  of  one  man's  work  for  three 
hundred  working  days  in  one  year  is  5,500  bushels  of  wheat. 
Setting  aside  an  ample  quantity  for  seed,  this  wheat  can  be 
moved  to  Minneapolis,  where  it  is  converted  into  1,000  bar- 
rels of  flour,  and  the  flour  is  moved  to  the  city  of  New 
York.  By  similar  processes  of  conversion  of  the  work  of 
milling  and  barrelling  into  the  labor  of  one  man  for  a  year, 
we  find  that  the  work  of  milling  and  putting  into  barrels 
1,000  barrels  of  flour  is  the  equivalent  of  a  man's  work  for 
one  year.  By  a  computation  based  upon  the  trains  moving 
on  the  New  York  Central  Railroad,  and  the  number  of  men 
engaged  in  the  work,  we  find  that  120  tons,  the  mean  be- 
tween 4,500  bushels  of  wheat  and  1,000  barrels  of  flour,  can 
be  moved   1,700  to  2,000  miles  under  the  direction  of  one 


'jti  WHA  T  MAKES 

man  working  eighteen  months,  equal  to  one  and  a  half  men 
working  one  year.  When  this  wheat  reaches  New  York 
City,  and  comes  into  possession  of  a  great  baker,  who  has 
established  the  manufacture  of  bread  on  a  large  scale,  and 
who  sells  the  best  of  bread  to  the  working  people  of  New 
York  at  the  lowest  possible  price,  we  find  that  i,ooo  barrels 
of  flour  can  be  converted  into  bread  and  sold  over  the 
counter  by  the  work  of  three  persons  for  one  year.  Let  us 
add  to  the  six  and  a  half  men  already  named  the  work  of 
another  man  six  months,  or  half  a  man  one  year,  to  keep  the 
machinery  in  repair,  and  our  modern  miracle  is  that  seven 
men  suffice  to  give  i,ooo  persons  all  the  bread  they  cus- 
tomarily consume  in  a  year.  If  to  these  we  add  three  for 
the  work  of  providing  fuel  and  other  materials  to  the  rail- 
road and  to  the  baker,  our  final  result  is  that  ten  men  work- 
ing one  year  serve  bread  to  one  thousand.* 

^  It  may  not  be  assumed  from  this  analysis  of  the  production  of  wheat  upon 
what  are  known  as  the  great  "  Bonanza  Farms"  of  the  Northwest,  that  any  in- 
ference is  to  be  drawn  from  these  facts  either  for  or  against  the  large  holdings 
of  land  as  distinct  from  small  farms  or  "  peasant  proprietorship  "  so  called. 

If  consideration  be  given  to  the  kind  of  crop  which  is  to  be  raised,  it  will  be 
apparent  that  a  certain  proportion  of  the  products  of  agriculture  may  rightly  be 
raised  upon  the  largest  allotments  of  land  to  which  machinery  may  be  applied 
in  the  greatest  measure,  by  which  method  the  largest  production  will  be  as- 
sured at  the  least  cost. 

"Wheat  is  essentially  a  crop  of  this  kind.  It  contains  the  maximum  of  nutri- 
ment in  the  least  bulk.  It  can  be  moved  over  long  distances  at  low  cost,  and  it 
is  a  prime  necessity  of  life.  It  may,  therefore,  well  be  produced  in  largest 
quanlity  at  the  lowest  measure  of  cost,  even  though  this  method  may  for  a 
time  injure  the  condition  and  impair  the  prosperity  of  the  small  farmer  who 
cannot  adopt  machinery  in  so  great  a  measure,  or  who  has  not  the  capital  neces- 
sary for  extensive  cultivation. 

Maize  or  Indian  com,  on  the  other  hand,  containing  less  value  in  the  same 
bulk,  may  well  be  raised  upon  smaller  allotments  of  land  nearer  the  places  of  con- 
sumption, if  it  is  to  be  used  in  the  form  of  meal  ;  but  maize  may  also  be  consid- 
ered one  of  the  crops  subject  to  the  application  of  large  capital,  and  to  being 
raised  in  the  most  economic  manner  on  large  farms  when  it  is  to  be  fed  to 
.cattle  or  hogs,  and  thus  concentrated  into  a  removable  form. 


THE  RATE   OF    WAGES?  J'J 

Again,  iron  lies  at  the  foundation  of  all  the  arts.  At  an 
average  of  200  pounds  per  head  in  the  United  States,  the 
largest  consumption  of  iron  of  any  nation,  we  yet  find  that 
the  equivalent  of  one  man's  work  for  one  year,  divided  be- 
tween the  coal  mine,  the  iron  mine,  and  the  iron  furnace, 

But  although  the  wheat  and  com  crop  constitutes  so  large  a  factor  in  the 
subsistence  of  the  people,  there  are  yet  very  many  other  products  of  agriculture 
which  can  only  be  raised  in  part  by  hand  labor  or  with  less  application  of 
machinery,  and  upon  small  farms  more  economically  than  they  can  be  upon  large 
ones.  Hence  it  follows  that  in  districts  like  the  central  part  of  the  State  of  New 
York,  which  was  formerly  the  great  centre  of  wheat  production  of  the  United 
States,  as  soon  as  the  competition  in  the  sale  of  grain  of  the  great  Western  farms 
began  to  be  severe,  the  land  being  under  no  restriction  either  of  lease  or  settle- 
ment or  other  artificial  condition,  was  immediately  converted  to  other  crops, 
such  as  fruit  and  vegetables,  which  will  bear  transportation  over  short  distances 
only,  or  of  seeds  and  the  like  ;  while  the  land  in  closer  neighborhood  to  the 
great  cities,  which  under  former  conditions  and  in  the  absence  of  cheap  trans- 
portation was  of  necessity  devoted  to  the  coarser  or  more  staple  crops,  is  now 
devoted  to  market  gardening. 

Thus  it  has  happened  that  while  the  large  farmers  prosper  the  small  farmers 
prosper  yet  more,  not  being  under  the  necessity  of  applying  themselves  to  a  few 
coarser  staples,  but  adapting  their  land  to  any  demand  which  may  happen  to 
exist  in  their  immediate  neighborhoods. 

The  production  of  wheat  in  the  central  part  of  New  York  is  about  as  large  as 
it  ever  was  when  it  was  the  great  wheat  centre  of  the  country,  yet  it  is  now  a 
very  insignificant  factor  in  wheat  production,  and  the  farmers  in  this  section 
have  attained  vastly  greater  prosperity  by  diversity  in  their  production,  and  by 
the  application  of  improved  tools  combined  with  hand  labor,  than  they  ever 
obtained  under  the  former  method. 

The  secret  of  success  in  agriculture,  as  in  many  other  matters,  therefore,  lies 
in  the  freedom  of  the  land  from  the  artificial  restrictions  of  leases,  settlements, 
and  the  like — by  which  English  land  is  now  so  much  encumbered,  and  the 
reason  why  the  agriculture  of  the  Eastern  and  Middle  States  has  advanced  in 
method  and  prosperity  in  the  face  of  Western  competition,  is  to  be  found  in  the 
absolute  freedom  in  the  purchase,  sale,  and  use  of  land,  which  is  the  rule  in  this 
country.  Land  is  itself  a  tool  or  instrumentality,  and  under  our  laws  and  customs 
the  tools  ultimately  fall  to  him  who  can  use  them  best  ;  or  it  may  be  considered 
as  a  laboratory  rather  than  a  mine,  in  which  the  product  is  in  ratio  to  the  intel- 
ligence which  is  applied  to  its  use. 


78  WHA  T  MAKES 

suffices  for  the  supply  of  500  persons.  One  operator  in 
the  cotton  factory  makes  cloth  for  250,  in  the  woollen  fac- 
tory for  300 ;  one  modern  cobbler  (who  is  any  thing  but  a 
cobbler),  working  in  a  boot  and  shoe  factory,  furnishes  1,000 
men,  or  more  than  1,000  women,  with  all  the  boots  and  shoes 
they  require  in  a  year.  So  it  goes  on  ;  and  the  more  effec- 
tive the  capital,  the  higher  the  wages,  the  lower  the  cost, 
the  more  ample  the  supply. 

But  in  the  consideration  of  this  or  any  other  theory  of 
wages,  it  must  always  be  remembered  that  these  natural 
laws  which  govern  the  actions  of  men  in  the  conduct  of 
the  processes  of  industry,  work  very  slowly,  and  are  sub- 
ject to  variable  causes  or  interruptions  which  may  suspend, 
retard,  or  even  reverse  their  normal  action  for  a  considera- 
ble period.  For  instance,  the  process  of  making  iron,  be- 
ginning with  the  mining  of  the  coal  and  of  the  ore  and  end- 
ing with  the  conversion  of  the  materials  in  the  furnace,  calls 
for  the  use  of  a  very  large  capital,  and  for  the  highest 
scientific  attainments  in  the  heads  of  departments  and  in 
the  administration  of  the  work.  It  also  requires  special 
skill  on  the  part  of  a  small  portion  of  the  workmen,  but  the 
larger  part  of  the  work  is  not  of  the  kind  that  calls  for  any 
great  measure  of  intelligence,  and  is,  in  fact,  mainly  hand- 
work. It  might  therefore  happen  that  the  country  which 
first  engaged  in  this  branch  of  industry  on  a  large  scale 
would  obtain  a  paramount  control  of  all  markets  and  might 
be  able,  for  a  long  period,  to  prevent  the  building  up  of  com- 
petitive works  elsewhere.  In  fact,  so  long  as  the  only  fuel 
with  which  iron  was  smelted  was  charcoal,  the  colonies  of 
America  were  able  to  supply  themselves,  and  even  to  ex- 
port large  quantities  of  iron  to  Great  Britian.  But  when  a 
method  was  invented  for  the  application  of  coal  to  the 
smelting  of  iron,  the  supremacy  of  Great  Britain   in   this 


THE  RATE  OF  WAGES?  79 

art  was  assured  for  a  long  period.  A  dense  population 
gathered  round  her  mines,  skilful  enough  for  this  work,  but 
otherwise  unintelligent,  uninstructed,  and  irremovable,  or 
practically  incapable  of  meeting  the  conditions  necessary  for 
beginning  this  work  in  other  countries.  Under  such  condi- 
tions as  these,  the  British  employers  of  labor  in  making  iron 
were  in  a  position  which  enabled  them  to  keep  wages  down, 
and  to  keep  prices  and  profits  up  for  a  long  period,  as  in 
fact  they  did.  Under  such  relative  conditions  the  competi- 
tion with  all  other  countries,  especially  a  country  like  the 
United  States  where  population  was  very  sparse  and  capital 
was  very  limited,  was  of  necessity  long  delayed,  even  though 
our  deposits  of  iron  and  coal  are  so  placed  as  to  be  more 
easily  worked.  And  even  though  a  ton  of  iron  made  in  the 
United  States  now  represents  a  much  less  quantity,  or  less 
number  of  days  of  labor,  than  a  ton  of  iron  produced  in 
Great  Britain,  it  was  not  always  so.  It  therefore  became  a 
mere  question  of  expediency  whether  or  not  to  interpose  a 
temporary  protective  duty  in  order  to  overcome  certain 
artificial  conditions.  It  was  held  that  a  country  should 
render  itself  substantially  independent  of  all  other  coun- 
tries in  the  making  of  iron,  because  iron  is  one  of  the  essen- 
tial articles  of  war.  These  arguments  were  entitled  to  all 
the  consideration  which  they  may  deserve.  No  opinion 
need  here  be  expressed  upon  them. 

The  same  retardation  in  the  working  of  natural  laws  also 
occurred  in  respect  to  the  inventions  of  Arkwright  and 
others  in  cotton-spinning.  England  succeeded  for  a  long 
time  in  retaining  control  of  these  inventions,  which  were  of 
prime  importance,  by  making  it  a  penal  offence  to  carry 
drawings  or  models  to  any  other  country.  By  this  joint 
control  of  the  processes  of  making  iron  and  the  application 
of  machinery  to  the  cotton  manufacture,  England  obtained 


8o  WHA  T  MAKES 

the  supreme  control  for  a  time  of  this  latter  art,  and  fairly 
succeeded  in  preventing  these  modes  of  work  from  being 
carried  to  this  or  any  other  country  for  very  many  years. 
The  cotton  manufacture  was  not  established  in  this  country 
until  Samuel  Slater  succeeded  in  building  machinery  from 
memory,  having  been  unable  to  bring  plans  from  Eng- 
land ;  of  course  such  an  undertaking  was  at  a  great 
disadvantage.  In  this  case,  again,  the  main  question  as  to 
the  development  of  textile  establishments  by  means,  of  a 
protective  duty  became  one  of  expediency  only.  The 
expediency  of  these  protective  duties  was  sustained  upon 
the  ground  that  although  the  people  were  for  the  time 
subjected  to  the  necessity  of  paying  higher  prices  for  their 
iron  and  for  their  textile  fabrics  than  they  would  otherwise 
have  paid,  an  ultimate  reduction  of  cost  and  of  price  to  a 
much  lower  plane  was  thereby  assured,  and  has  doubtless 
been  accomplished. 

These  two  examples  are  cited  in  order  to  show  that  this 
theory  of  wages  does  not  of  necessity  carry  with  it  the 
laisser  faire  idea  of  legislation.  It  is  not  denied  that  special 
branches  of  industry  may  be  promoted  by  legislation  of  this 
sort.  It  is  not  denied  that  wages  in  that  special  branch 
may  be  temporarily  raised,  because  by  means  of  the  ob- 
struction to  foreign  import  which  the  duty  interposes,  the 
price  of  the  domestic  fabric  is  for  a  time  maintained  at  a 
higher  point  than  it  would  otherwise  be  ;  and  since  the  sum 
from  which  wages  and  profits  are  alike  derived  is  the  value 
of  the  joint  product,  it  follows  that,  in  these  particular  arts, 
so  long  as  the  protective  duty  serves  to  keep  up  the  price, 
there  may  be  more  money  to  be  divided  in  rates  of  wages 
to  the  operatives  who  do  this  special  work. 

But,  it  will  be  observed  that  such  additional  profit  or  ad- 
ditional wage  is  at  the  cost  of  the  consumer  in  the  same 


THE  RATE   OF   WAGES?  8l 

country,  and  that  there  can  be  no  material  effect  upon  the 
general  rate  of  wages  because  the  number  of  persons  now  en- 
gaged in  any  branch  of  industry  which  could  be  subjected 
to  foreign  competition  is  very  small  in  ratio  to  the  whole 
number  of  persons  engaged  in  gainful  occupation.  Such 
duties  may  be  expedient  or  not.  That  is  not  the  question 
at  issue  in  this  treatise.  I  cite  these  cases  in  order  that  the 
true  theory  of  wages  may  not  be  prejudiced  in  the  mind  of 
any  one  by  any  apparent  antagonism  to  the  protective 
theory,  which  may  be  justified  on  entirely  independent 
grounds. 

In  the  judgment  of  the  writer  the  source  of  wages  and 
the  law  by  which  they  are  determined  fail  to  be  com- 
prehended, both  by  the  advocates  of  protection  and  free 
trade,  and  this  failure  leads  to  much  useless  and  bitter  con- 
tention. If  the  honest  advocate  of  protection  were  once 
convinced  that  when  an  industry  had  become  fairly  estab- 
lished the  rate  of  wages  determines  itself  according  to  the 
general  average  of  wages  in  other  work  of  analogous  kind, 
and  that  the  wages  thereafter  tend  to  the  share  of  the  la- 
borer becoming  greater  and  greater,  he  would  be  less 
averse  to  considering  the  date  when  the  protective  duty 
could  either  be  reduced  or  removed.  No  one  but  the  most 
confirmed  doctrinaire  can  deny  that  the  argument  in  respect 
to  wages  and  to  their  maintenance  which  is  presented  on 
behalf  of  a  protective  tariff,  is  conscientiously  presented  in 
the  interest  of  labor  on  behalf  of  those  who  adhere  to  it. 

On  the  other  hand,  if  the  equally  sincere  advocate  of  free 
trade  could  once  be  convinced  that  the  continued  imposi- 
tion of  the  duty  does  not  of  necessity  involve  the  continued 
taxation  of  the  many  for  the  benefit  of  the  few ;  if  he  could 
admit  that  it  might  even  be  expedient,  under  certain  cir- 
cumstances, for  the  State  to  grant  a  special  privilege  to 


82  WHA  T  MAKES 

some  special  branch  of  work  for  a  certain  period  of  time, 
much  foolish  talk,  bitter  contention,  and  absurd  misrepre- 
sentation would  be  avoided. 

The  tariff  question,  the  protection  of  women  and  children 
in  factories  from  overwork  or  from  injury,  and  other  like 
subjects  of  legislation,  are  questions  of  expediency,  varying 
with  the  time  and  circumstances  of  each  country.  They 
are  not  like  slavery  or  inconvertible  paper  money,  moral 
questions,  upon  which  no  compromise  can  be  tolerated  ;  but, 
on  the  contrary,  they  are  subjects  for  reasonable  considera- 
tion and  for  reasonable  compromise  among  honest  and  fair- 
minded  men.  When  the  whole  direction  of  domestic  in- 
dustry has  been  in  some  measure  altered  by  the  continued 
imposition  of  high  duties  upon  foreign  imports  which  were 
the  necessity  of  war,  nothing  could  be  more  injudicious  than 
to  adopt  revolutionary  changes.  It  may  have  been  bad  policy 
to  impose  the  high  duties,  but  it  does  not  follow  that  it  would 
be  good  policy  to  remove  them  all  at  once,  or  that  he  is  a 
spoliator  who  asks  time  to  adjust  his  capital  and  the  labor 
which  he  employs  to  other  conditions. 

I  have  recited  the  various  changes  which  have  affected  a 
single  textile  art.  Periods  of  prosperity  and  adversity  af- 
fect all  commercial  and  manufacturing  countries  alike.  They 
are  more  intense  in  one  country  than  another ;  sometimes 
most  intense  in  a  country  which,  like  Great  Britain,  depends 
upon  the  widest  foreign  commerce,  sometimes  in  a  country 
which,  like  the  United  States,  depends  mainly  upon  domestic 
commerce.  Statutes  in  regard  to  the  collection  of  revenue, 
the  hours  of  labor,  and  the  like,  may  make  these  fluctuations 
a  little  more,  perhaps  a  little  less  intense,  but  in  the  long  run 
they  have  and  can  have  no  permanent  effect.  Competition 
adjusts  itself  to  all  conditions,  and,  in  the  long  run,  wages 
or  earnings  will  be  the  highest  in  that  country  in  which 


THE  RATE   OF   WAGES?  83 

capital  and  labor  cooperate  to  the  fullest  extent,  thereby  as- 
suring the  largest  production  at  the  lowest  labor  cost. 

The  progress  of  the  United  States  has  been  uniformly 
onward,  despite  all  the  vacillations  and  changes  in  her  finan- 
cial policy.  Our  greatest  dangers  and  most  serious  disasters 
have  arisen  from  bad  money  rather  than  from  bad  methods 
of  taxation.  The  danger  now  before  us,  growing  out  of  the 
continued  coinage  of  a  silver  dollar  of  light  weight,  is  per- 
haps the  most  serious  one.  Next  to  that  comes  the  danger 
growing  out  of  the  enormous  excess  of  our  national  revenue ; 
but  even  this  enormous  excess  of  revenue  will  itself  force 
upon  us  a  change  in  our  method  of  taxation.  In  that  again 
comes  a  danger,  because  next  to  the  evil  which  may  be  in- 
flicted upon  a  country  by  the  imposition  of  heavy  taxes,  is 
the  evil  which  may  come  from  an  injudicious  method  in  re- 
moving them  after  the  industry  of  the  country  has  adjusted 
itself  to  them. 

I  have  endeavored  to  separate  the  fundamental  principle 
of  wages  from  all  such  side  issues,  and  to  prove,  with  as 
much  scientific  accuracy  as  may  be  possible,  that  the  inter- 
ests of  the  employer  and  the  employed  are  absolutely 
identical,  and  that  progress  and  poverty  are  not  of  necessity 
evolved  together  under  the  existing  customs  of  the  English- 
speaking  people.  I  have  referred  to  the  admirable  address 
of  Mr.  Robert  Giffen,  proving  a  similar  progress  to  that  of 
this  country  in  Great  Britain,  and  from  similar  data.  I  had 
not  read  that  treatise  until  after  the  substance  of  this  essay 
had  been  compiled. 

Let  me  refer  finally  and  but  a  moment  to  one  great  cause 
of  disturbance  in  the  relations  of  men  to  each  other.  The 
inventor,  the  man  of  science,  is  the  great  disturber  of  exist- 
ing conditions.  He  renders  worthless  great  masses  of  cap- 
ital which  had  been  valuable ;  he  takes  away  the  hereditary 


84  ^^A  T  MAKES 

occupation  of  vast  numbers  of  laborers  who  may  be  capable 
of  doing  no  other  kind  of  work.  In  the  process  of  adjust- 
ment to  these  new-conditions  many  hardships  arise,  but  the 
end  is  progress,  both  in  wealth  and  in  the  alleviation  of 
poverty.  The  only  accumulation  which  has  any  permanent 
value  consists  in  that  experience  and  versatility,  in  that 
habit  and  capacity  of  applying  brains  and  hand  alike  to  any 
kind  of  work  which  is  waiting  to  be  done,  whereby  men  are 
enabled  to  prosper  under  any  and  all  conditions.  The  only 
capital  of  any  importance,  which  can  be  transmitted  from 
one  generation  to  another  is  this  power  of  applying  brain  and 
hand  together  to  useful  work,  whatever  may  be  the  chang- 
ing conditions  under  which  the  work  of  each  generation 
must  be  done. 

Poverty  may  for  a  time  ensue,  as  the  consequence  of  in- 
vention and  the  consequent  displacement  of  labor;  but  it 
will  be  observed  that  this  poverty  does  not  ensue  either  frora 
the  accumulation  of  capital  or  from  the  private  ownership  of 
land,  so  much  as  it  does  from  the  destruction  of  capital  and 
in  taking  away  the  value  from  land. 

The  jenny  and  the  mule  destroyed  the  spinning-wheel ; 
the  power-loom  destroyed  the  hand-loom  ;  the  railroad  is 
destroying  the  canal ;  the  railroad  is  reducing  the  value  of 
land  in  one  place  and  increasing  it  in  another.  The  discov- 
ery of  coal  oil  would  have  destroyed  the  candle  market, 
were  it  not  that  a  demand  for  the  altars  of  the  Catholics 
continued  to  sustain  a  few  candle  works.  The  gas  engine 
is  destroying  the  small  stationary  steam-engine  in  England, 
and  will  soon  do  so  here.  Sir  Henry  Bessemer  has  taken  from 
the  English  landowner  all  power  to  collect  any  rent  from 
land  devoted  to  wheat.  With  each  of  these  changes 
the  few  suffer  for  a  time,  but  the  many  gain  in  welfare 
With  each  of  these  changes  the  proportion  of  capital  neces. 


THE  RATE   OF  WAGES?  85 

sary  to  a  given  production  is  decreased  ;  great  fortunes  are 
lost,  unless  the  owners  of  such  fortunes  can  adapt  their  ma- 
chinery to  all  the  changing  conditions  ;  but  while  some 
fortunes  are  thus  destroyed,  others  are  gained.  At  the 
present  time,  or  we  may  say  for  the  last  three  years,  half  the 
iron  works  in  the  United  States  have  been  out  of  blast,  and 
many  will  never  come  into  blast  again  ;  but  during  the 
same  three  years  the  production  and  consumption  of  iron 
has  been  greater  than  in  any  other  three  years  since  the  con- 
tinent was  settled.  True  prosperity  may  be  guaged  by  the 
consumption  of  iron  in  all  the  arts  of  life,  about  as  surely  as  by 
any  statistical  method.  The  loss  of  fortune  to  a  few  produc- 
ers of  iron  is  of  no  consequence  except  to  themselves,  if  more 
iron  be  provided  for  consumption.  Most  of  these  changes 
come  gradually  ;  some  of  them  come  suddenly.  What  are 
called  hard  times  induce  the  grestest  progress.  The  great 
crops  in  this  country  increased  every  year  during  the  war, 
such  was  the  incentive  to  invention,  which  became  almost 
compulsory  in  consequence  of  the  withdrawal  of  a  million 
men  from  productive  industry. 

I  have  compared  the  cotton-mill  of  1830  with  that  of 
1883,  in  the  same  mill-yard ;  but  there  is  little  left  of  the 
factory,  either  mill  or  machinery,  of  1830;  and  if  there  were 
it  would  be  almost  useless.  The  saving  in  the  cost  of  mov- 
ing merchandise  over  existing  railroads,  comparing  one  year 
with  the  next  preceding,  that  is,  over  the  railroads  existing  in 
each  year,  has  far  more  than  equalled  the  cost  of  building  all 
the  new  railroads  constructed  in  the  subseqent  year  for 
fifteen  years,  from  1865  to  1880.  In  other  words,  the  reduc- 
tion in  the  charge  on  existing  railroads  each  year,  computed 
on  the  quantity  of  merchandise  moved  in  that  year,  has 
amounted  to  a  sum  equal  to  the  sum  expended  in  the  ex- 
tension of  railroads  in  the  next  year,  for  each  and  every 
year  since  1865. 


86  IVffA  T  MAKES 

We  have  been  treating  only  a  question  of  material  wel- 
fare: What  makes  the  rate  of  wages  ?  One  answer  at  least 
we  may  surely  give.  When  head  and  hand  are  rightly 
trained  together  so  that  a  man  can  do  the  work  which  is 
always  waiting  to  be  done,  whatever  the  rate  of  wages  may 
be,  it  will  sufBce  for  the  purchase  of  good  subsistence.  He 
who  combines  the  greatest  skill  of  head  and  hand  in  useful 
work  will  make  that  exact  progress  in  the  accumulation  of 
wealth  which  will  be  the  just  measure  of  the  services  which 
he  renders  to  his  fellow-men.  In  the  last  analysis  the  rate 
of  wages  rests  wholly  on  character  and  capacity  and  under 
such  conditions,  the  advancement  of  science  is  but  another 
name  for  progress  in  human  welfare. 

I  am  well  aware  that  there  is  nothing  original  in  the 
statement  of  the  fact  that  the  application  of  machinery  to 
production  has  a  tendency  to  increase  the  wages  of  the 
workman,  and  at  the  same  time  increase  the  purchasing 
power  of  the  money  in  which  wages  are  paid.  This  is  a 
truism,  but  how  seldom  is  it  comprehended  !  Apparently 
never,  in  the  ordinary  discussions.  Neither  employer  nor  em- 
ploy^ can  regulate  the  rate  of  wages  which  is  to  be  paid  in 
money,  by  any  bargain  or  agreement  covering  a  long  period. 
If  one  employer  agrees  to  pay  a  higher  rate  than  his  com- 
petitors, it  will  only  be  a  question  of  time  when  his  business 
will  become  unprofitable  and  he  must  become  bankrupt,  un- 
less he  uses  more  effective  machinery,  and  thus  assures  a 
larger  product  from  a  less  number  of  laborers.  If  any  con- 
siderable number  of  employers  secure  the  work  of  laborers 
at  a  less  rate  of  wages  than  others  in  the  same  kind  of  oc- 
cupation, unless  there  is  some  compensating  advantage  to 
the  workman  in  their  special  establishments,  the  mere  fact 
that  the  laborer  is  willing  to  work  at  such  less  rate  proves 
him  to  be  incapable  or  inefificient,  and  therefore  his  work 
will  be  of  high  cost. 


THE  RATE   OF  WAGES?  %J 

I  have  attempted  to  demonstrate  that  in  all  productive 
employment  the  rate  of  wages  which  can  be  paid  in  money 
must  depend  on  the  sum  of  money  which  is  received  from 
the  sale  of  the  product.  Inasmuch  as  those  who  work  for 
wages  in  strictly  productive  occupations  constitute  by  far 
the  largest  portion  of  wage  receivers,  the  rates  of  wages 
for  personal  services,  which  are  only  indirectly  productive, 
are  gauged  by  the  same  standard.  All  profits  and  wages 
must  come  out  of  the  gross  product.  Furthermore,  all 
profits,  wages,  earnings,  or  other  income,  must  be  substan- 
tially derived  from  each  year's  product,  because  the  year 
corresponds  to  the  series  of  seasons  in  which  one  crop  is 
made.  A  part  of  the  product  of  each  year  is  carried  over 
to  start  the  work  of  the  next  year  upon  ;  but  a  part  of 
the  product  of  the  present  year  was  brought  over  from  the 
previous  year  to  start  the  work  of  this  upon.  Therefore  the 
measure  of  what  there  is  to  be  divided  by  the  measure  of 
money  must,  in  the  long  run,  depend  upon  what  each  year's 
product  will  bring  in  money.  If,  then,  the  annual  product 
is  large,  because  the  resources  are  great,  because  capital  is 
ample,  because  labor  is  effective,  because  the  army  is  but  a 
border  police, — then  the  sum  of  money  derived  from  the 
sale  will  also  be  large,  for  the  reason  that  in  spite  of  all 
natural  obstructions  between  one  nation  and  another,  the 
product  of  one  nation,  as  a  whole,  comes  directly  or  in- 
directly, into  competition  with  the  product  of  the  world. 

If  the  propositions  submitted  in  this  treatise  can  be 
sustained — to  wit :  that  wages  are  a  constantly  increasing 
remainder  over  after  lessening  rates  of  profit  have  been  set 
aside  from  an  increasing  product,  it  follows  that  the  ability 
of  a  very  productive  country  to  find  a  market  for  its  excess, 
especially  of  farm  products,  is  a  most  important  factor  in 
determining  the  price  of  the  whole  product,  and  therefore 


88  WHAT  MAKES 

in  determining  the  general  or  average  rate  of  wages  and 
profits  which  can  be  recovered  from  the  sale  of  the  whole. 
Hence  arises  the  importance  of  our  foreign  export  of  the 
products  of  agriculture.  Even  though  the  quantity  ex- 
ported be  but  a  tithe  of  the  whole,  yet  the  sale  of  this  part 
determines  the  price  of  the  whole,  and  it  therefore  becomes 
a  prime  factor  in  the  general  rate  of  wages. 

If  this  latter  statement  be  questioned,  it  will  only  need  a 
moment's  consideration  to  determine  it.  If  the  surplus  or 
over-production  for  domestic  use,  of  our  oil,  grain,  cotton, 
meat,  cheese,  butter,  lard,  etc.,  could  not  be  sold  in  or  ex- 
changed for  the  products  of  other  countries,  what  should 
we  do  with  it?  We  could  not  now  consume  it  ourselves; 
we  could  not  move  people  from  other  countries  here  in 
suf^cient  number  to  consume  it  in  any  one  year.  We  can- 
not establish  manufactures  more  rapidly  because  goods  are 
already  in  excess.  We  must  exchange  our  excess  for  tea, 
coffee,  sugar,  hides,  wool,  and  the  like,  and  in  the  process 
of  this  exchange  the  price  of  all  our  crops  is  determined 
by  what  this  excess  will  bring  ;  the  remainder  over  from 
these  sales  establishes  the  standard  of  farm  wages,  by,  or  in 
comparison  with  which,  all  other  wages  are  in  the  main  de- 
termined. Hence  the  average  rate  of  domestic  wages  rests  in 
a  very  great  degree,  under  our  present  conditions,  on  our 
finding  a  foreign  market  for  the  excess  of  our  products  of 
agriculture  ;  if  this  market  is  limited  or  reduced,  the  pur- 
chasing power  of  our  farmers,  numbering  one  half  our 
population,  is  reduced,  and  this  re-acts  on  the  demand  for 
domestic  manufactures.  Thus  it  is,  that  directly  or  indi- 
rectly the  value  of  our  total  production  is  determined  by  a 
world-wide  competition.  What  would  be  the  effect  of  the 
competition  of  the  laborers  who  now  engage  in  the  produc- 
tion of  that  which  we  export  if  they  were  forced  into  other 
work  for  domestic  use  only? 


THE  RATE   OF    WAGES?  89 

The  number  of  persons  engaged  in  each  specific  crop  is 
not  given  separately  in  the  census,  and  can  only  be  inferred 
by  deducing  relative  numbers  from  the  proportion  which 
the  value  of  each  crop  bears  to  the  value  of  the  whole.  The 
total  number  of  farmers  and  farm  laborers  listed  in  the 
census  was  7,670,493.  On  the  bases  of  relative  values,  about 
two  and  a  half  per  cent.,  or  less  than  200,000,  were  employed 
in  the  production  of  sugar,  wool,  swamp-rice,  hemp,  barley, 
and  a  few  other  articles  which  may  be  in  part  imported  from 
foreign  countries. 

On  the  other  hand,  on  the  maximum  estimate  of  the 
total  value  of  all  the  products  of  agriculture  or  of  the  pas- 
ture, over  seventeen  and  a  half  per  cent,  was  the  declared 
value  of  the  export  of  farm  products.  From  which  it  may 
be  inferred  that  over  1,300,000  farmers  and  farm  laborers 
were  employed  in  meeting  this  foreign  demand. 

May  it  not  therefore  be  said  that  all  commerce,  both 
domestic  and  foreign,  is  a  process  of  liquidation,  by  means 
of  which  the  respective  shares  of  capital  and  labor  are  deter- 
mined, each  becoming  a  larger  share  of  a  larger  sum  recovered 
from  such  sales,  the  wider  the  exchange  of  product  for  pro- 
duct, and  the  greater  the  service  which  each  renders  the 
other,  whether  capitalist  or  laborer. 

Finally,  the  rate  of  wages,  measured  in  terms  of  money, 
can  only  be  determined  by  dividing  this  remainder  over, 
after  capital  has  received  its  compensation,  among  the 
laborers  who  do  the  work  ;  the  respective  share  of  each 
laborer  is  then  rated  only  by  his  or  her  individual  skill, 
industry,  and  integrity.  In  the  end  character  and  capacity 
determine  the! relative  rates  of  wages  of  those  who  do  the 
work. 

I  may  conclude  by  again  referring  to  the  proposition  of 
Frederick  Bastiat,  which  is  the  motto  of   this  essay :    All 


90  THE  RATE   OF    WAGES. 

interests  are  harmonious.  '*  In  proportion  to  the  increase 
of  capital  the  absolute  share  (of  the  product)  falling  to 
capital  is  augmented,  but  the  relative  share  is  diminished, 
while  the  share  of  the  laborer  is  increased  both  absolutely 
and  relatively." 


APPENDIX  I. 


This  appendix  will  be  very  uninteresting  except  to  students.  A 
summary  of  its  contents  may,  therefore,  be  given  for  the  benefit 
of  readers  who  do  not  care  to  go  over  its  dry  details,  as  follows  : 

Approximate  estimate  of  the  value  of  annual  product  of 

the  census  year       ........         $10,000,000,000 

Domestic  farm  consumption  estimated       ....  1,000,000,000 

Commercial  product      .....  9,000,000,000 

Estimated  profits  of  capitalists  .      $450,000,000 

Estimated  savings  of  other  classes      .        450,000,000  900.000,000 

Wages  fund 8,100,000,000 

Number  of  persons  engaged  in  all  gain- 
ful occupations  in  round  figures  .    17,400,000 

Deduct  soldiers,  marines,  and  persons 
engaged  in  subordinate  positions  in 
the  Government  service      ,         .         .         100,000 


Remainder        .         .         .    17,300,000 
Administrative  force  i.  e.,  mental  rather  than  manual  work  1,100,000 

Working  force,  i.  e,,  wage-earners  or  small  farmers    .         .  l6, 200,000 

Average  remuneration  of  the  administrative  force,  per  year  $1,000 

Average  wages  or  earnings  of  the  working  force,  per  year  $432 

Gross  amount  of  national,  State,  and  municipal  taxes  in 

census  year  over $700,000,000 

or  eight  per  cent,  of  the  commercial  product. 

Each  worker  is  one  of  a  group  of  2.90  persons  ;  therefore  each 
average  person  in  a  workman's  family  must  find  shelter,  sub- 
sistence, clothing,  and  pay  taxes  out  of  what  forty  to  forty-five 
cents  a  day  will  buy. 

Each  five  cents'  worth  added  to  each  person's  share,  or  each 
fifteen  cents  added  to  each  workman's  wages  per  day,  implies, 
at  the  present  time  (i884)an  additional  product  and  sale  of 
commodities  worth  one  thousand  million  dollars  a  year,  which  is 

91 


^2  ^^^  T  MAKES 

about  the  present  value  of  our  wheat  product,  of  our  pig-iron 
product,  and  of  all  our  textile  fabrics  of  cotton,  wool,  and  silk 
combined. 

In  the  text  of  this  treatise  I  have  presented  certain  estimates  of 
the  value  of  the  annual  product  of  the  United  States  in  the  cen- 
sus year ;  also  estimates  of  the  gross  amount  of  the  profits  of 
capital ;  and,  finally,  estimates  of  the  gross  amount  of  wages, 
which,  divided  by  the  number  of  persons  engaged  in  all  occupa- 
tions, yielded  certain  rates.  The  treatment  of  this  subject  in 
exUnso  belongs  more  to  the  science  of  statistics  than  to  the  science 
of  political  economy.  For  very  many  years  this  branch  of  work 
has  been  a  subject  of  very  great  interest  to  me,  and  many  years 
since  I  analyzed  the  returns  of  the  Massachusetts  census  of 
1875,  which  census  remains  to  this  day  a  model  of  accuracy  of 
its  kind. 

Upon  the  basis  of  the  facts  developed  in  that  census,  I  have 
endeavored  to  continue  the  treatment  of  the  subject,  and  to  con- 
sider the  larger  figures  of  the  census  of  the  United  States.  In 
all  such  undertakings,  he  who  accepts  the  actual  figures,  without 
change  or  alteration,  will  be  sure  to  be  misled.  I  concur  fully 
with  the  opinion  of  other  special  census  experts  with  whom  I 
have  consulted,  as  to  the  qualifications  which  are  necessary  to  be 
made  in  making  use  of  many  of  the  tables  of  the  United  States 
census.  I  cannot  give  these  qualifications  in  better  words  than 
in  those  of  Mr.  Joseph  D.  Weeks,  the  special  expert  who  investi- 
gated the  general  subject  of  wages  in  the  manufacturing  industries. 
His  views  are  as  follows  :  "  The  census  year  was  in  many  indus- 
tries a  year  of  remarkable  prosperity.  The  number  of  persons 
employed  in  certain  industries  at  the  close  of  that  year  was  very 
much  in  excess  of  the  number  of  persons  employed  at  the  begin- 
ning. In  most  instances  the  census  gave,  not  the  average  num- 
ber of  persons  employed  in  a  given  establishment  during  the 
year,  but  the  number  of  persons  employed  at  the  close  of  the 
year.     Now  it  will  be  manifestly  unjust  to  divide  the  amount  of 


THE  RATE   OF  WAGES?  93 

wages  received  in  that  industry  for  the  whole  year  by  the  number 
of  persons  employed  at  the  close  of  the  year,  and  say  that  was  the 
average  earnings  of  the  workmen  engaged  in  that  industry.  The 
wages  are  for  the  whole  year,  and  the  number  of  employes  very 
much  in  excess  of  the  average  for  the  year.  We  have  also  found, 
as  the  result  of  experience,  that  when  workmen  do  not  secure 
work  in  their  own  occupation,  they  go  into  others,  working  in 
many  cases  for  themselves.  For  example,  our  coal  miners  on  the 
Monongahela  River  have  worked  on  the  average  only  eight  or 
nine  months  in  the  year.  The  idle  time  is  generally  in  the  sum- 
mer. Many  of  them  own  little  farms,  and  during  the  slack  season 
for  coal  mining  they  are  engaged  in  working  their  farms  ;  while 
others,  not  having  farms,  seek  employment  with  the  farmers  of 
the  neighborhood." 

In  the  census  figures  which  I  shall  adduce,  in  sustaining  the 
averages  of  earnings  which  I  have  reached  by  other  and  very  dif- 
ferent methods,  this  qualification  will  be  applied  according  to  my 
own  judgment,  or  in  accordance  with  the  information  which  I 
have  received  from  other  special  experts  ;  and  I  think  all  who 
are  accustomed  to  make  judicious  use  of  statistics  will  concur  in 
the  opinion  that  approximate  accuracy  has  at  least  been  attained. 

For  instance,  in  the  production  of  a  little  less  than  4,000,000 
tons  of  pig-iron  in  the  census  year,  according  to  the  figures  given 
by  Mr.  Jas.  M.  Swank  and  Prof.  R.  Pumpelly,  two  of  the  most 
competent  special  experts,  the  number  of  men  and  boys  employed 
was  as  follows  : 

In  coal  mines  producing  that  part  of  the  coal  which  was 

used  in  iron  furnaces,  about     .....  20,000 

In  iron  mines        ........  31,668 

In  blast  furnaces 41,875 

Total 93,543 

The  sum  of  the  wages  of  this   force  was   $28,458,822  or  $305 

each,  on  the  average.    This  appears  to  be  an  excessively  low  rate. 

But  there  is  little  doubt  that  this  payment  covered  the  work  of 


94  WHAT  MAKES 

substantially  nine  months  only,  and  in  order  to  reach  a  true 
statement  of  the  average  wages  in  the  production  of  pig  iron  in  the 
census  year,  we  must  add  about  one  third,  thus  giving  an  average 
in  all  the  several  departments  of  the  work  of  $400  per  year, 
again  sustaining  my  computation  of  the  general  average,  which  is 
given  hereafter  at  $400  nett  for  each  person  employed  in  any 
kind  of  gainful  occupation. 

I  have  assumed  in  the  body  of  the  treatise  that  $520  repre- 
sents, on  the  average,  the  full  measure  of  all  that  is  produced  by 
each  person  engaged  in  gainful  occupation  in  the  United  States, 
and  which  comes  into  the  market  for  sale  or  exchange.  I  have 
also  assumed  that  ten  per  cent,  of  all  that  is  produced  may  be  set 
aside,  in  a  normal  year,  for  the  maintenance  and  for  the  increase 
of  capital,  but  the  larger  part  of  this  profit  is  enjoyed  by  but  a 
small  portion  of  those  who  do  the  work.  The  greater  part  of 
the  wage-earners  save  but  little.  I  have  assumed  an  estimate 
of  the  value  of  the  annual  product  as  $10,000,000,000.  I  have 
set  aside  one  tenth  part  for  the  domestic  consumption  of 
farmers  and  their  families.  In  the  list  of  the  occupations 
of  the  people  of  the  United  States,  which  is  probably  one  of 
the  most  accurate  of  the  enumerations,  a  little  less  than  one 
half  of  the  number  of  males  employed  in  any  gainful  occupa- 
tion are  listed  as  farmers  and  farm  laborers,  numbering  7,670,- 
493  persons  out  of  a  total  of  17,392,099,  but  as  those  who 
are  engaged  in  agriculture  are  mostly  men,  this  force  prob- 
ably sustained  at  least  one  half  the  population,  or  25,000,000  per- 
sons. The  estimate  of  $1,000,000,000,  as  the  domestic  consump- 
tion of  this  half  of  the  population,  therefore  assigns  $40  a  year 
to  each  agricultural  person  as  the  value  of  the  product  consumed 
upon  the  farm,  which  is  not  included  in  any  commercial  or  census 
estimate  of  the  value  of  the  annual  product.  The  remainder  of 
the  annual  product  is  $9,000,000,000  in  value  by  my  estimate, 
which  would  constitute  the  annual  value  of  the  commercial  pro- 
duct, or  that  part  of  the  product  which  is  bought  and  sold. 

The  next  question  is,  What  part  of  this  remainder  accrues  to 


THE  RATE   OF  WAGES?  95 

capitalists  or  to  owners  of  land,  in  the  form  of  profits,  interest,  or 
rent  ?  I  have  set  aside  five  per  cent,  upon  the  annual  product 
which  comes  into  the  market, — that  is  to  say,  $450,000,000  as  the 
possible  share  of  capitalists.  The  remainder  of  the  commercial 
product  is  $8,550,000,000.  I  now  set  aside  five  per  cent,  more 
upon  the  commercial  product,  to  represent  the  profits  of  business 
and  the  savings  of  working  people,  $450,000,000.  Again  we  have 
a  remainder  of  $8,100,000,000,  which  is  subject  to  division  in  the 
way  of  salaries,  wages,  or  the  earnings  of  small  farmers. 

Before  we  compute  the  sub-division  of  this  remainder,  it  will 
be  necessary  to  devote  a  few  paragraphs  to  national  wealth,  and 
to  the  national  profits  or  savings  which  are  possible  ;  that  is,  to 
the  increase  of  the  national  capital. 

I  feel  less  assurance  in  respect  to  the  estimate  of  that  part  of 
the  annual  product  of  the  United  States  which  can  be  set  aside 
for  the  maintenance  and  increase  of  capital  than  in  respect  to  the 
general  estimate  of  the  portion  which  goes  to  those  who  do  the 
work.  I  have  estimated  the  savings  or  addition  to  capital  at 
$900,000,000  in  the  census  year. 

It  will  be  observed  that  the  measure  of  the  savings  of  the  nation 
is  something  quite  different  from  the  measure  of  that  which 
would  constitute  the  profits  of  individuals  ;  for  instance,  the 
manufacturer  or  merchant  may  make  a  very  considerable  profit 
out  of  his  work,  but  he  then  distributes  a  very  large  portion  of 
this  profit  in  his  family  expenses,  thereby  sustaining  a  large 
number  of  persons  who  are  included  among  the  so-called  work- 
ing classes  or  wage  earners. 

The  final  end  or  contribution  to  the  capital  of  the  nation  is 
therefore  a  very  much  less  sum  than  the  apparent  profit  which 
accrues  either  from  the  rent  of  real  estate  or  from  the  income 
derived  by  the  individual  owners  of  manufacturing,  railroads,  or 
other  investments,  or  from  business. 

There  are  very  few  data  available  to  an  individual  student 
whereby  even  an  approximate  estimate  of  the  net  savings  of  the 
nation  can  be  determined. 


96  IVffA  T  MAKES 

My  deduction  from  many  methods  of  analysis  is  that  the 
normal  proportion  which  can  be  set  aside  for  the  maintenance  or 
increase  of  the  capital  of  the  nation  can  not  exceed  ten  per  cent, 
of  its  annual  production,  and  is  probably  less. 

It  would  perhaps  be  useless  to  give  examples  of  the  various 
methods  by  which  I  have  attempted  to  determine  this  point  :  one 
will  suffice. 

The  officials  of  the  Census  Department  have  made  a  very  care- 
ful investigation  in  respect  to  the  total  amount  of  property 
assessed  for  taxes  in  the  United  States,  and  have  extended  this 
sum  so  as  to  cover  the  absolute  wealth  of  the  country.  The  total 
valuation  made  by  the  local  assessors  for  purposes  of  local  taxa- 
tion was  as  follows,  for  the  year  of  which  a  return  was  made  in 
the  census  of  1880  : 

Value  of  real  estate $13,036,766,925 

Value  of  personal  estate 3,866,226,618 

Total $16,902,993,543 

which  sum  divided  by  the  population  gives  $337  per  capita,  but 
the  valuation  for  purposes  of  assessment  varies  greatly  in  different 
States,  and  a  very  large  proportion  of  actual  property  is  either 
exempted — such  as  a  large  part  of  the  railway  system — or  else  it 
escapes  taxation. 

The  census  valuation  of  the  actual  or  absolute  wealth  of  the 
United  States  is  as  follows  : 

IN   MILLIONS. 

Farms $10,197 

Residence  and  business  real  estate,  including  water-power  .         .         9,881 

Railroads  and  equipment  ........         5-536 

Telegraphs,  shipping,  and  canals 419 

Live  stock,  whether  on  or  off  farms,  and  farming  tools  and  machinery,       2,406 
Household  furniture,   paintings,  books,  clothing,  jewelry,  household 
supplies  of  food,  fuel,  etc.      ........         5,000 

Mines  (including   petroleum   wells)  and  quarries,   together  with  one 
half  the  annual  product  reckoned  as  the  average  supply  in  the  hands 
of  the  producers  or  dealers      ........  781 

Three  quarters  of  the  annual  product  of  agriculture  and  manufactures, 
and  of  the  annual  importation  of  foreign  goods,  assumed  to  be  the 
average  supply  in  the  hands  of  the  producers  and  dealers         .         .         6, 160 


THE  RATE  OF   WAGES?  9/ 

Churches,  schools,  asylums,  public  buildings  of  all  kinds,  and  other 

real  estate  exempt  from  taxation     .......  2, OCX) 

Specie        ............  6i2 

Miscellaneous  items,  including  tools  of  mechanics      ....  650 

Total ($43, 642, 000,  OCX))        .        $43,642 

It  will  be  observed  that  in  this  estimate  of  wealth  the  value  of 
land  is  included. 

It  is  computed  that  four  fifths  of  the  valuation  of  the  farms 
consists  of  the  land,  and  from  one  half  to  two  thirds  of  the  es- 
timate of  the  residence  or  business  real  estate  also  consists  in  the 
value  of  land. 

It  will  also  be  observed  that  the  estimate  includes  household 
furniture,  paintings,  books,  household  supplies  and  the  like,  as 
well  as  churches,  schools,  asylums,  and  public  buildings,  and  that 
the  estimate  of  the  value  of  railroads  is  taken  at  the  normal 
amount  of  stock  and  bonds  issued,  the  true  cost  and  real  value 
being  much  less. 

If  we  separate  from  this  estimate  that  part  of  the  valuation 
which  consists  in  the  mere  value  of  land,  and  also  setting  aside 
churches,  asylums,  and  the  like,  which  represent  wealth  con- 
sumed rather  than  reproductive  capital  in  the  ordinary  use  of 
that  term,  the  total  amount  would  be  reduced  to  at  most  twenty- 
five  thousand  millions,  and  perhaps  to  a  less  sum,  and  this  would 
represent  the  actual  capital  or  labor  saved  for  purposes  of  repro- 
duction during  the  whole  period  of  the  existence  of  the  States 
and  colonies  of  America,  thereby  sustaining  the  commonly  ac- 
cepted proposition,  that  the  value  of  the  actual  capital  of  the 
richest  state  or  nation  can  bear  a  ratio  to  the  value  of  its  annual 
production  of  only  two  to  threefold. 

The  invaluable  part  of  the  capital  of  a  nation  is  that  portion 
which  has  become  a  part  of  the  coinmon  wealthy  for  the  use  of 
which  no  price  can  be  charged, — such  as  the  opening  of  the  com- 
mon ways,  the  removal  of  obstructions  to  the  navigation  of  water- 
ways, the  clearing  of  arable  land,  and  other  results  of  labor  of 
the  same  kind  ;  but  yet  more  potent  in  reproductive  enterprise  is 


9S 


IVHA  T  MAKES 


the  immaterial  capital  which  ensues  from  our  increasing  command 
over  the  forces  of  nature,  and  our  power  of  directing  them  to  the 
service  of  man. 

It  is  admitted  by  all  statisticians  of  repute  that  all  valuations 
of  national  wealth  which  are  made  in  terms  of  money,  like  the 
foregoing,  must  be  used  with  great  caution,  and  are  very  liable  to 
mislead,  especially  when  made  use  of  to  compare  one  period  with 
another. 

Such  comparisons,  when  honestly  made,  are  rather  an  indica- 
tion of  ignorance  or  incompetence  in  the  use  of  statistics,  than 
of  any  thing  else. 

For  instance,  witness  the  census  data : 


over  assessed  value 


In  i860  the  assessed  value  of  all  the  property  of  the  U.  S.  was 

given  as  being     . 
True  valuation,  estimate 
Excess  of  so-called  true  valuation 
In  1870  the  assessed  value  was 
True  valuation,  estimate 
Excess  of  so  called  true  valuation 
In  1880  the  assessed  value  was 
True  valuation,  estimated     . 
Excess  of  so-called  true  valuation 


$12,084,560,005 

16,159,616,068 

34  per  cent. 

14,178,986,732 

30,068,518,507 

112  per  cent. 

16.902.993.543 

43.642,000,000 

158  per  cent. 


It  is  perfectly  well  known  that  a  great  deal  of  attention  was 
given  to  the  attempt  to  ascertain  the  true  valuation  of  1880,  and 
very  little  in  i860  ;  while  the  figures  of  1870  are  vitiated  and 
rendered  almost  worthless  by  the  depreciation  of  the  currency  at 
that  date. 

Hence,  any  one  who  should  attempt  to  picture  the  progress  of 
the  nation  by  a  statement  that  we  have  gained  thirty  thousand 
million  dollars  (I)  in  wealth  in  twenty  years,  or  fifteen  hundred 
million  dollars  (!)  a  year,  would  be  obliged  to  defend  the  honesty 
of  his  purpose  by  an  admission  of  his  utter  ignorance  of  the  sub- 
ject. 

In  the  first  place,  the  statements  are  wholly  misleading,  because 
the  value  of  land  is  included,  and  therefore  the  increase  in  its 
value  forms  an  element  in  the  case. 


THE  RA  TE  OF  WAGES  t  99 

Second,  unless  such  increase  in  the  valuation  of  land,  and  of 
capital  placed  upon  the  land,  has  been  accompanied  by  a  greater 
proportionate  increase  in  the  annual  product  of  both,  out  of 
which  the  people  may  be  subsisted — then  an  increase  of  wealth 
on  the  part  of  the  few  who  own  the  land  would  only  be  evidence 
of  an  increase  of  want  on  the  part  of  the  many  who  consume  its 
products. 

Third,  because  the  data  of  i860  were  absolutely  incomplete 
and  almost  worthless. 

Such  estimates  and  comparisons  of  wealth  have  their  use,  but 
their  use  is  only  or  mainly  in  their  connection  with  annual  pro- 
duction and  distribution.  It  is  doubtless  true  that  this  country 
has  made  greater  progress  during  the  last  twenty  years,  both  in 
wealth  and  in  productive  capacity,  than  ever  before.  The  rea- 
sons are  plain — three  of  the  principal  causes  may  be  cited  : 

1.  The  abolition  of  slavery. 

2.  The  application  of  machinery  to  agriculture. 

3.  The  extension  and  unification  or  consolidation  of  the  railway 
system. 

It  may  possibly  be  true  that  one  half  the  apparent  difference  in 
wealth  between  i860  and  1880  represents  an  actual  addition  to 
the  productive  capital  of  the  country.  One  half  would  be  $1,500,- 
000,000,  or  $750,000,000  per  year.  During  this  period  the  average 
population  of  the  country  has  been  40,000,000  persons,  and  there- 
fore such  a  gain  would  be  at  the  rate  of  $18.75  to  each  person  in 
each  year. 

When  viewed  in  this  aspect,  the  statement  in  hundreds  of  mil- 
lions is  reduced  to  terms  of  easy  comprehension,  and  the  result 
indicates  the  very  slow  rate  at  which  capital  can  be  accumulated 
and  maintained,  rather  than  the  reverse.  It  must  also  be  remem- 
bered that  whatever  the  gain  in  wealth  may  be,  it  is  enjoyed  by  a 
very  small  portion  of  the  population. 

On  the  other  hand,  the  taxes  which  have  been  imposed  during 
this  period  have  been  little  below  $18.75  per  head,  if  we  take 
into  view  only  the  actual  assessed  taxes  during  and  since  the 


100  WHAT  MAKES 

war.  In  the  census  year,  the  aggregate  of  national,  State,  and 
municipal  taxation  was  over  $700,000,000,  or  over  $14  per  cap- 
ita, and  if  the  war  taxes  be  computed  in  their  ratio  to  the  popu- 
lation of  that  date,  the  sum  of  all  the  taxes  imposed  upon  the 
people  of  this  country  since  i860  has  without  question  been  equal 
to  at  least  eighty  per  cent,  of  the  whole  sum  which  has  been 
added  to  our  productive  capital  during  the  same  period. 

In  this  light  the  importance  of  a  correct  estimate  of  the  value 
of  our  annual  product,  of  the  possible  profit  thereon,  the 
method  of  its  distribution,  and  the  incidence  of  taxation,  become 
apparent.  I  have  made  use  of  the  census  estimates  of  national 
wealth  only  for  the  purpose  of  rendering  the  importance  of  this 
latter  investigation  more  apparent,  and  not  because  I  attach  much 
value  to  statements  of  accumulated  wealth  when  measured  in 
terms  of  money. 

In  pursuance  of  the  main  subject,  it  appears  that  the  sum  of 
national  taxes  which  have  been  imposed  by  the  Government  of 
the  United  States  upon  the  people  during  the  last  twenty  years 
has  been  over  $7,200,000,000. 

The  amount  of  State,  county,  and  municipal  taxes  for  the  year 
reported  in  the  census  was  over  $300,000,000,  or  $6  per  capita. 
This  is  at  a  less  rate  than  for  a  few  years  preceding,  and  at  a  less 
rate  than  was  imposed  during  the  war  and  the  years  immediately 
subsequent  thereto.  If  this  rate  of  $6  per  capita  be  applied  to 
the  average  population  for  twenty  years,  the  gross  amount  of 
such  taxes  has  been  not  less  than  $4,800,000,000.  The  total 
amount  of  taxes,  therefore,  including  national.  State,  county,  and 
municipal,  in  twenty  years,  has  been  $12,000,000,000,  or  at  the 
rate  of  $600,000,000  per  year. 

This  sum  bears  the  ratio,  for  the  whole  period,  of  eighty  per 
cent,  to  the  sum  which  I  have  computed  as  the  true  addition  to 
the  capital  of  the  nation  during  twenty  years,  yet,  in  spite  of  this 
burthen,  we  have  prospered,  and  have  gained  in  general  welfare 
as  well  as  in  national  wealth. 

At  the  risk  of  wearying  the  reader  by  repetition  let  me  state 


THE  RATE  OF  WAGES?  lOI 

this  in  another  form,  admitting  that  there  has,  without  question, 
been  an  abnormal  increase  in  the  capital  of  the  United  States 
since  the  end  of  the  war,  the  chief  factor  of  which  abnormal  in- 
crease has  been  the  saving  in  the  cost  of  moving  commodities  by 
railway,  can  we  measure  this  single  force  in  any  way  ? 

In  a  treatise  upon  "  The  Railroad,  the  Farmer,  and  the  Public," 
reprinted  herewith,  I  have  clearly  proved  the  fact  that  had  the 
merchandise,  one  half  of  which  consisted  of  crude  farm  products, 
which  was  moved  in  the  year  1883,  been  subjected  to  the  average 
charge  per  ton  per  mile  which  was  charged  on  the  whole  railway 
service  of  the  United  States  from  1866  to  1869  inclusive,  the  sum 
of  such  charge  in  1883  would  have  been  between  twelve  and 
fourteen  hundred  million  dollars,  in  place  of  an  actual  charge  of 
five  hundred  and  fifty  million  dollars.  Between  these  two  periods 
the  value  in  terms  of  gold  of  the  principal  farm  products  of  the 
United  States,  which  constitute  at  least  one  half  the  substance 
moved  by  the  railway,  has  varied  in  very  slight  measure  ;  hence 
it  follows  that  by  far  the  greater  part  of  the  actual  saving  of  labor 
which  has  been  brought  about  by  the  extension  and  effective 
working  of  the  railway  system,  had  inured  to  farmers  up  to  that 
time. 

This  addition  to  our  wealth  has  been  in  very  great  measure 
applied  to  an  increase  of  capital  in  railroads,  to  improvements 
upon  farms  and  farm  buildings,  and  to  various  arts  and  manu- 
factures which  must  of  necessity  be  carried  on  near  to  the  farmers 
upon  whom  they  depend  for  a  market. 

Again,  I  have  set  aside,  by  the  estimate  of  the  census  year,  nine 
hundred  million  dollars,  or  ten  per  cent,  of  the  commercial  product, 
as  the  probable  proportion  of  the  annual  product  which  could  be 
applied  to  the  maintenance,  improvement,  or  increase  of  capital 
in  that  year.  This  was  at  the  rate  of  f  18  per  capita  of  the  popu- 
lation of  that  year. 

The  population  of  the  United  States  has  averaged  forty  mil- 
lion for  the  whole  term  from  i860  to  1880,  or  substantially  that 
number.     Multiply  forty  million  by  $18,  and  we  have  the  average 


102  WHA  T  MAKES 

sum  of  seven  hundred  and  twenty  million  dollars  each  year,  cor- 
responding to  my  estimate  of  the  census  year  of  nine  hundred 
million  dollars.  Multiply  seven  hundred  and  twenty  million  dol- 
lars by  twenty  years,  and  we  reach  the  sura  of  fourteen  thousand 
four  hundred  million  dollars,  set  aside  from  the  production  of 
the  twenty  years,  for  the  maintenance  and  increase  of  capital. 
Deduct  fourteen  thousand  four  hundred  million  dollars  from 
twenty-five  thousand  million  dollars,  which  appears  to  be  the 
utmost  part  of  the  census  estimate  of  total  wealth  in  1880  which 
can  be  considered  the  work  of  man,  and  we  leave  only  ten  thou- 
sand six  hundred  million  dollars  as  the  saving  of  the  nation 
through  its  whole  previous  history.  This  may  perhaps  lead  to 
the  conclusion  that  my  estimate  of  ten  per  cent,  now  set  aside  as 
capital,  is  a  reasonable  or  perhaps  excessive  estimate  of  that  part 
of  the  annual  product  which,  in  a  normal  year,  can  be  set  aside 
for  its  maintenance  or  increase  ;  $900,000,000  being  ten  per  cent, 
of  an  estimated  salable  product  of  $9,000,000,000.  If,  during 
the  last  few  years,  there  has  been  an  abnornal  increase  of  capital 
at  the  rate  of  more  than  $18  per  capita,  it  has  not  been  at  the 
cost  of  the  laborer,  but  it  has  been  only  a  small  part  of  that 
which  the  capitalists  have  themselves  saved  to  the  people  in  the 
extension  of  the  railway  system,  and  in  the  erection  of  factories, 
mills,  and  works  of  various  kinds  of  the  most  productive  and 
effective  sort.  This  abnormal  increase  of  capital  has  now  ceased, 
and  the  prices  of  farm  products  are  now  falling. 

It  is  now  probable  that  the  great  forces  which  I  have  re- 
cited have  in  some  measure,  or  for  the  time,  become  exhausted, 
and  that  the  present  period  of  depression  indicates  a  great  change 
or  adjustment  of  prices  on  a  lower  plane  and  of  a  permanent  char- 
acter, which  will  be  ultimately  beneficial,  but  which  in  its  progress 
is  disastrous  to  many  and  very  hard  to  be  borne  by  all  ;  because 
in  such  a  period  constructive  enterprises  are  checked,  and  the  ex- 
isting population  lives  from  hand  to  mouth,  anxious  as  to  what 
each  day  may  bring  forth. 

In  such  a   period  excessive  taxation   becomes  an  intolerable 


THE  RATE  OF    WAGES?  IO3 

burden.  This  burden  is  to  be  measured  by  the  ratio  which  the 
sum  of  all  the  taxes  bears  to  the  possible  sum  of  all  the  savings  of 
the  community,  rather  than  by  its  ratio  to  the  gross  value  of  all 
products  ;  in  other  words  by  its  ratio  to  net  income  rather  than  by 
its  ratio  to  gross  income.  It  will  be  borne  in  mind  that,  with  very 
few  if  any  exceptions,  all  taxes  are  distributed,  wherever  they  may 
be  first  imposed,  and  ultimately  fall  on  all  consumers  in  almost 
the  exact  ratio  of  their  consumption. 

If  imposed  upon  dwellings,  they  are  charged  to  occupants  with 
their  rent,  or  their  rent  is  enhanced  so  as  to  cover  them. 

If  imposed  upon  machinery  or  other  instrumentalities  of  pro- 
duction, they  are  charged  to  the  cost  of  goods  and  are  recovered 
from  the  sales. 

If  imposed  upon  railroads,  warehouses,  shops,  or  other  instru- 
mentalities of  distribution,  they  are  charged  to  the  cost  of  dis- 
tributing goods. 

If  imposed  upon  the  goods  or  wares  themselves,  whether  under 
a  tariff  or  an  excise,  they  are  added  to  the  price  and  recovered  from 
the  sales. 

Taxation  falls  on  rich  and  poor  according  to  their  consumption, 
while  profits  or  savings  are  sorted  under  a  very  different  law  ; 
hence  even  the  ratio  of  gross  taxation  to  the  net  savings  of  the 
nation  gives  no  true  measure  of  its  burden,  but  only  brings  its 
weight  into  prominence. 

To  the  rich  a  tax  constitutes  more  of  an  annoyance  than  a 
heavy  burden  ;  to  the  man  of  moderate  income  it  merely  causes 
a  slight  decrease  of  comfort  or  a  small  reduction  in  savings  ; 
from  the  skilled  workman  it  may  take  half  of  what  he  might  have 
saved  ;  from  the  laborer  it  takes  even  the  small  pittance  that 
might  have  served  to  mitigate  the  poverty  of  his  later  years ;  and 
from  the  poor  it  takes  a  part  of  what  is  necessary  to  existence 
and  reduces  them  to  pauperism.  No  class  of  men  have  so  grave 
an  interest  in  an  honest  and  economical  government  and  in  the 
reduction  of  taxation  than  those  who  possess  no  property  of  their 
own,  but  who  depend  wholly  upon  their  daily  work  for  their 
daily  bread. 


104  WHAT  MAKES 

It  is  for  these  reasons  that  while  we  may  rejoice  in  the  pros- 
perity which  has  enabled  us  to  reduce  our  national  debt  and  to 
put  it  in  the  way  of  final  payment  within  the  present  century,  we 
may  now  protest  against  the  excess  of  taxation  which  finds  men 
poor,  keeps  them  poor,  and  will  leave  them  poor,  unless  it  is  re- 
moved. 

Therefore  the  great  issues  of  the  hour  are  measures  not  men, 
and  whatever  may  be  the  result  of  the  elections  now  pending, 
every  man  chosen  will  be  held  to  a  stern  account,  and  no  glitter- 
ing generalities  about  the  increase  of  national  wealth  will  serve  to 
meet  the  demand  for  relief  from  the  intolerable  burden  of  ex- 
cessive taxation  (Novr.,  1884). 

Having  thus  treated  the  probable  profits  or  savings  in  the 
census  year,  and  assuming  that  my  estimates  are  approximately 
correct,  and  that  there  remained  in  the  census  year  $8,100,000,000 
worth  of  product  to  be  divided  in  terms  of  money  between  the 
mental  and  manual  workers,  or  between  the  administative  and  the 
executive  force,  in  the  form  of  salaries,  wages,  or  earnings,  the  next 
problem  is  the  subdivision  of  this  sum.  We  can  reach  a  close 
estimate  of  the  mode  of  this  subdivision  by  a  consideration  of  the 
details  of  the  census  in  respect  to  the  occupations  of  the  people 
and  the  ascertained  rates  of  wages  in  special  classes  ;  qualifying 
the  figures  by  such  additions  to  the  rates  given  in  the  census  as  may 
be  called  for  in  each  case,  as  before  stated. 

We  find  in  the  list  of  all  persons  engaged  in  gainful  occu- 
pations, 1,100,000  persons,  under  the  following  classification  : 

Clergymen 64,698 

Lawyers 64,137 

Physicians  and  Surgeons 85,671 

Teachers  and  Scientific  Persons          .......  227.710 

Actors 4,812 

Architects 3,375 

Artists,  or  Teachers  of  Art 9,104 

Authors,  Lecturers,  and  Literary  Persons  .         .         .         .         .         .  1,131 

Chemists,  Assayers,  and  Metallurgists         ......  1,969 

Dentists     ............  12,314 

Railroad  Builders  and  Contractors      .......  1,206 

Civil  Engineers 8,261 


THE  RATE   OF    WAGES?  I05 

Officials  of  Railroad  Companies 2,069 

Traders  and  Dealers 481,450 

Bankers  and  Money  Brokers •         •         .15,180 

Officials  of  Banks 4.421 

Officials  of  Insurance  Companies 1.774 

Manufacturers  and  Officials  in  Mfg  Cos 52,217 

Hotel  Keepers 32,453 

Journalists .  12,308 

Total 1, 086,260 

This  classification  is  only  fairly  accurate.  If  it  were  possible 
to  get  the  number,  superintendents  and  foremen  should  be  sub- 
stituted for  about  two  thirds  of  the  teachers  who  are  in  the  lower 
grades. 

This  class  of  persons  represents  those  whose  work  is  more 
mental  than  manual,  more  administrative  than  executive.  In 
round  numbers  they  amount  to  1,100,000.  The  remainder  of 
those  who  are  listed  as  being  engaged  in  gainful  occupations  con- 
stitute the  actual  working  force — mechanics,  artisans,  clerks,  fac- 
tory operatives,  small  farmers  and  farm  laborers,  domestic  servants, 
common  laborers,  express  men,  conductors,  and  all  others, 
whose  work  possesses  a  commercial  value,  and  whose  rate  of  wages 
constitutes  the  measure  of  their  share  of  the  annual  product. 

Now,  then,  the  last  remainder  of  the  assumed  annual  product 
amounted  to  $8,100,000,000.  The  total  number  of  the  actual 
working  force  in  the  list,  aside  from  the  administrative  force,  and 
recited  as  above  in  the  census  year,  was  16,200,000.  If  to  each 
one  of  these  be  assigned  a  rate  of  wages  upon  the  average  of 
$432 — being  the  sum  which  when  subjected  to  the  average  per 
cent,  or  rate  of  national.  State,  and  municipal  taxation,  would 
leave  $400  net  each  per  year, — the  sum  of  all  their  wages 
would  amount  to  $6,998,400,000.  There  would  then  remain 
$1,101,600,000  to  be  divided  among  the  1,100,000  persons  of  the 
first  class,  to  wit  :  those  engaged  in  the  mental  work,  or  in  the 
work  of  administration  ;  and  this  sum  would  yield  to  each  one  of 
these  annually  $1,000.  It  will  be  observed  that  these  conclusions 
were  reached  a  priori^  before  any  consideration  or  attention  had 
been  given  to  actual  rates  of  wages  as  disclosed  in  the  census 


Io6  WHAT  MAKES 

being  deduced  from  an  estimate  of  the  annual  product  reached  in 
the  manner  previously  described. 

Before  testing  these  results  by  the  actual  data  of  the  census, 
the  total  of  persons  occupied  should  be  considered.  It  is  as  fol- 
lows : 

Agriculture,  males 7.075.983 

females 594. 5io 

Professional  and  Personal  Service,  males 2,712.943 

females 1.361,295 

Trade  and  Transportation,  males 1,750.892 

'•       "                '*             females 59.364 

Manufacturing,  Mechanical,  and  Mining,  males    ....  3,205,124 

"                       ..            .•         •«        females          .         .         .  631,988 

Total  of  all  classes 17,392,099 

Total,  aside  from  Agriculture 9,721,606 

Deduct  Civil  and  Military  Employes  of  the  Government  in  subor- 
dinate or  minor  positions,  say 92,000 

Total,  in  round  figures,  of  all  persons  engaged  in  any  gainful  pro- 
ductive occupation  ........     17,300,000 

Deduct  administrative  and  mental  work         .....       1,100,000 

Total   in  the  actual  work  of   production  or   distribution,  who  are 

substantially  the  wage-earners 16,200,000 

The  first  test  by  which  the  approximate  accuracy  of  this  esti- 
mate of  about  $432  average  earnings  may  in  some  measure  be 
determined  will  be  found  in  the  exhaustive  treatise  of  the  census, 
upon  Transportation,  compiled  by  the  special  agent,  Mr.  A.  E. 
Shuman.  This  compilation  is  based  upon  the  actual  returns 
from  existing  railroads,  for  specific  periods  of  twelve  months, 
corresponding  to  the  making  up  of  their  accounts  in  the  year 
immediately  preceding  the  census  Now,  it  is  well  known  that 
the  accounts  of  railroad  operations  are  of  necessity  kept  in  the 
most  accurate  manner.  Hence  these  returns  may  be  considered 
as  more  closely  approximating  the  actual  earnings  of  the  em- 
ployes than  any  other  returns  of  the  census.  It  will  also  be  ob- 
served that  railroad  employes  are  almost  wholly  men,  and  that 
among  these  men  are  represented  the  highest-paid  officials,  and 
also  the  lowest-paid  laborers.     They  number  as  follows  : 


THE  RATE   OF    WAGES?  lo/ 


General  officers 3.375 

Clerks 8,655 

Station  men 63,380 

Engineers 18,977 

Conductors          . 12,419 

Other  train  men 48,254 

Machinists 22,766 

Carpenters , 23,202 

Other  shop  men .  43,746 

Track  men 122,489 

All  other  employes ..,.51 ,694 

Total 418,957 

The  clerks  being  counted  in  the  work  of  administration,  and 
the  large  proportion  of  well  paid  engineers  and  conductors  carry- 
ing up  the  executive  average  of  earnings. 

The  sum  of  their  earnings  was  $195,350,013,  averaging  to  each 
person  for  the  year  $466.  But,  upon  a  further  analysis,  it  ap- 
peared that  the  average  earnings  of  officers  and  clerks — three  per 
cent,  of  the  total  number — amounted  to  $1,015.44  each  ;  the  av- 
erage wages  of  all  the  others — ninety-seven  per  cent,  of  the  total 
number — were  $450  each.  If  I  am  right  in  assuming  that  these 
railroad  employes  are  a  fairly  representative  class  of  all  men  em- 
ployed in  gainful  occupations,  bearing  in  mind  the  less  rate  of 
earnings  of  women,  these  figures,  both  of  the  higher  grade  of  ad- 
ministrative work  and  the  lower  grade  of  executive  work,  fairly 
correspond  to  the  averages  of  my  assumed  figures  covering  all 
persons  occupied  within  the  limits  of  the  country. 

We  will  next  consider  another  class  of  persons,  chiefly  men 
and  boys,  to  wit  :  all  who  are  listed  as  being  employed  in  mining 
the  non-precious  metals — iron,  copper,  lead,  and  zinc.  In  a 
special  report  upon  this  industry,  it  appears  that  the  total  number 
returned  is  220,475  >  the  sum  of  salaries  and  wages  paid,  $71,- 
992,502  ;  an  average  to  each  person  of  $327.  But  all  the  census 
experts  concur  in  the  opinion  that  this  sum  did  not  represent 
over  three  fourths  of  a  full  year.  Many  new  mines  were  opened 
during  the  census  year,  of  which  the  returns  covered  only  a  part 
of  the  year ;  and,  as  has  been  stated  by  Mr.  Weeks,  work  is  not 


I08  WHA  T  MAKES 

continuous,  even  in  mines  at  regular  occupation.  If,  then,  we 
increase  the  sum  of  $327  by  the  addition  of  one  third,  thereby- 
converting  the  term  into  a  full  year's  payment,  provided  these 
men  find  employment  in  other  occupations,  we  reach  an  aver- 
age of  $436  as  the  income  of  each  person  employed  in  this 
arduous  work.  The  proportion  of  those  who  are  engaged  in  the 
work  of  administration  being  less  than  in  the  railroads,  a  fair  ap- 
proximation is  made  to  the  income  of  the  wage-earners  of  $400 
per  year  (see  previous  figures  on  iron). 

The  next  mode  of  comparison  may  be  with  the  average  earn- 
ings of  all  persons  who  are  listed  in  the  census  under  the  head 
of  manufacturing.  That  comprised  2,019,135  men,  531,639  wo- 
men, and  181,921  children, — a  total  working  force  of  2,732,695. 
The  sum  of  their  earnings  or  wages  was  $947,953,795, — giving 
an  average  to  each  person  of  $346.  But  this  result  again  must 
be  subjected  to  very  important  qualifications.  The  list  of  occu- 
pations listed  under  the  term  of  manufactures  includes  brick- 
making,  which  can  only  be  followed  six  months  in  the  year ; 
lumber-men's  work,  generally  limited  to  six  months  in  the 
year.  Other  branches  of  industry,  which  are  continuous,  are 
again  subjected  to  the  qualification  named  by  Mr.  Weeks.  The 
writer  was  one  of  the  special  experts  employed  in  taking  the  cen- 
sus of  the  cotton  manufacture.  He  began  among  the  first,  and 
gave  a  construction  to  the  directions  which  he  received,  which 
led  him  to  omit  from  the  number  of  persons  and  sum  of  wages 
in  the  cotton  manufacture  those  who  were  engaged  as  agents  or 
superintendents  in  charge  of  the  work.  In  all  other  branches  of 
the  census  he  has  been  informed  that  the  administrative  force 
was  included.  The  wages  in  the  cotton  manufacture  appear  to 
be  only  $245  each  per  year,  by  far  the  larger  portion  of  those 
employed  being  women  and  children  ;  but  in  his  judgment  this 
sum  should  be  raised  to  at  least  $280  and,  including  administra- 
tive force,  perhaps  to  $300  per  year,  in  order  that  it  may  be 
made  to  correspond  to  full  year's  work  of  those  who  were  con- 
tinuously employed. 


THE  RATE  OF   WAGES?  IO9 

In  general,  it  may  be  said  that  the  necessary  qualifications  by 
which  the  average  wages  disclosed  by  the  census,  in  respect  to 
all  manufactures,  should  be  governed,  would  lead  to  the  conclu- 
sion that  $346  represented  not  over  ten  months'  work.  And  if 
then  we  add  one  fifth  of  $346,  to  make  up  for  the  two  months,  we 
reach  a  general  average,  including  the  administrative  force,  of 
$415  each,  — again  substantially  corresponding  with  the  conclu- 
sions of  the  writer,  and  again  substantially  corresponding  to  the 
railway  figures  giving  due  consideration  to  the  lower  wages  of 
women  and  children. 

Subject  to  these  qualifications,  the  following  specific  data  from 
the  census  are  given,  in  respect  to  branches  of  manufacture 
which  may  be  considered  substantially  continuous.  Each  branch 
may  be  qualified,  according  to  the  judgment  or  knowledge  of  the 
reader.  It  should  be  noticed  that  those  who  are  listed  under 
the  head  of  carpentry  are  only  the  carpenters  who  are  engaged 
in  manufacturing  establishments  of  which  the  product  exceeded 
^500  a  year  ;  and  it  does  not  include  miscellaneous  carpenters, 
who  are  much  more  numerous.  In  all  the  textile  arts  the  figures 
should  probably  be  raised  at  least  one  fourth,  in  others  more  or 
less  according  to  the  special  conditions  of  each  case. 

Men.       Women.  Children.      Total.        Wages.       Avge. 


Agricultural  Implements, 

.   38,313 

73 

1,194 

39,580  $15,359,610  $388 

Book  Binding  and        ) 
Blank-Book  Making,  \ 

5,127 

4,831 

654 

10,612 

3,927,349 

371 

Boots  and  Shoes, 

104,021 

25,946 

3,852 

133.819 

50,995,144 

381 

Bread  and  Bak- 
ery Products, 

18,925 

2,210 

1.353 

22,488 

9,411,328 

419 

Carpentry, 

53.547 

77 

517 

54.138 

24,562,077 

454 

Cars, — Railroad  ) 
and  Street,       \ 

13.885 

13 

334 

14.232 

5,507.753 

388 

Carriages  and  Wagons, 

43.630 

273 

1,491 

45.394 

18,988,615 

400 

Men's  Clothing, 

77.255 

80,994 

2.504 

160,753 

45.940,353 

286 

Foundries*  and 
Machine  Shops, 

140,459 

675 

4.217 

145.351 

65,982,133 

454 

Furniture. 

45.180 

917 

2,620 

48.717 

20,388,794 

41S 

Jewelry, 

10,050 

1,998 

649 

12.697 

6,44[.688 

507 

Leather  Currying, 

10,808 

77 

168 

11.053 

4.845.413 

438 

Leather  Tanning, 

23.287 

188 

337 

23.812 

9,204.243 

387 

Malt  Liquors, 

27,001 

29 

190 

26,220 

12,198,053 

46S 

no 

WffA  T  MAKES 

Men. 

Women. 

Children. 

Total. 

Wages.      Arge. 

Marble  and  Stone, 

21,112 

23 

336 

21,471 

10.238,885  $477 

Paper, 

16,133 

7,640 

649 

24,422 

8,525,355 

349 

Printing  and  Publishing, 

45,880 

6,759 

5,839 

58,478 

30,531,627 

522 

Tobacco,  Cigars,  ) 
and  Cigarettes, 

40,099 

9.108 

4.090 

53.297 

18,464.562 

347 

Hardware, 

14,481 

814 

1,506 

16,801 

6,846,913 

407 

Cotton  Goods, 

64,107 

91,148 

30,217 

185,472 

45,014.419 

245 

Cutlery  and  Edge  Tools, 

9.458 

380 

681 

10,519 

4,447,349 

422 

Glass, 

17.778 

741 

5.658 

24,177 

9,144,100 

379 

Hats  and  Caps, 

11.373 

5,337 

530 

17,240 

6,635,522 

385 

Hosiery  and  Knit  Goods, 

7.517 

17,707 

3.661 

28,885 

6,701,475 

232 

Mixed  Textiles, 

17.471 

20,520 

5.382 

43,373 

13.316,753 

308 

Musical  Intruments. 

6,449 

57 

69 

6.575 

4.603,193 

692 

Woollen  Goods, 

46,978 

29.372 

10,154 

86,504 

25,836,292 

300 

No  data  exist  by  which  the  earnings  of  agricultural  laborers 
can  be  positively  converted  into  terms  of  money,  owing  to  the 
fact  that  by  far  the  larger  portion  receive  a  part  of  their  wages  in 
kind,  and  not  in  money.  By  the  courtesy  of  Mr.  J.  R.  Dodge, 
the  statistician  of  the  Agricultural  Department,  I  am  enabled  to 
submit  the  following  table  of  wages  of  agricultural  laborers  in 
the  year  1882.  Due  consideration  being  given  to  the  domestic 
consumption  of  the  farmer,  I  think  they  substantially  sustain  my 
assumed  average  of  the  subdivision  of  the  annual  product. 

Many  of  these  men  are  engaged  in  the  winter  as  lumbermen  or 
other  occupations,  or  as  stated  by  Mr.  Weeks,  in  mining,  they 
making  up  their  rate  to  the  full  average  for  the  year. 

No  census  data  exist  by  means  of  which  the  average  earnings 
of  persons  engaged  in  trade  or  commerce  can  be  estimated.  The 
average  of  those  who  are  engaged  in  other  kinds  of  transporta- 
tion than  by  rail,  to  wit,  upon  rivers,  expressmen,  and  wagoners, 
may  be  considered  in  the  ratio  which  these  occupations  bear  to 
the  railway  service.  The  men  who  are  employed  in  these  other 
branches  of  transportation  are  continually  changing,  sometimes 
being  engaged  upon  the  railway,  sometimes  in  the  other  branches 
of  the  work. 

The  average  earnings  of  persons  in  domestic  service  can  only 
be  established  by  their  known  ratio  to  the  work  of  the  factory 
operative,  or  of  other  persons  engaged  in  analogous  employ- 
ments. 


THE  RATE  OF  WAGES? 


Ill 


FARM  WAGES  IN   1882.^ 

By  the  Month,  and  by  the  Day,  in  Harvest ;  with  payment  in  Cash,  and  also 
in  Money  supplemented  by  Bpard. 


Monthly  Wages 

Transient  Wages 

States 

By  the  Year. 

During  Harvest,  per  day. 

and 

Territories. 

Without 

With 

Without 

With 

Board. 

Board. 

Board, 

Board. 

Maine 

$24.75 

$16.75 

$1.52 

$1.22 

New  Hampshire     . 

25-25 

16.72 

I.71 

1-35 

Vermont  .... 

2337 

16.00 

1.75 

1.35 

Massachusetts    . 

30.66 

18.25 

1.75 

1-35 

Rhode  Island     . 

27-75 

17.00 

1.60 

1.30 

Connecticut  . 

27.90 

17-37 

1.65 

1.33 

New  York    . 

23.63 

15-36 

1.89 

1.47 

New  Jersey  . 

24.25 

14.20 

2.09 

1.74 

Pennsylvania     . 

22.88 

14.21 

1-73 

1.30 

Delaware 

18.20 

12.50 

1.60 

1.25 

Maryland 

16.34 

9.89 

1.52 

I.15 

Virginia    .     . 

13.96 

9.17 

1.27 

.99 

North  Carolina 

12.86 

8.80 

1.20 

.85 

South  Carolina 

12.10 

8.10 

1.08 

.78 

Georgia    .     . 

12.86 

8.70 

1. 10 

.80 

Florida     .     . 

16.64 

10.20 

1. 12 

.80 

Alabama  .     . 

13-15 

9.09 

1.05 

.80 

Mississippi    . 

15-10 

10.09 

1.23 

.95 

Louisiana 

18.20 

12.69 

1. 10 

.85 

Texas .     .     . 

20.20 

14.03 

1.39 

1.08 

Arkansas .     . 

18.50 

12.25 

1-34 

1.02 

Tennessee     . 

13-75 

9.49 

1.30 

1. 00 

West  Virginia 

19.16 

12.46 

1.30 

1. 00 

Kentucky 

18.20 

11-75 

1.54 

I.18 

Ohio    .     .     . 

24-55 

16.30 

1.79 

I.4I 

Michigan .     . 

25.76 

17.27 

2.13 

1.76 

Indiana    .     . 

23  14 

15-65 

1.89 

1.58 

Illinois     .     . 

23.91 

17.14 

1.91 

1.54 

Wisconsin     . 

26.21 

1790 

2.50 

2.10 

Minnesota     . 

26.36 

1775 

2.61 

2.16 

Iowa   .     .     . 

26.21 

17-95 

2.25 

1. 81 

Missouri  .     . 

22.39 

13-95 

1.59 

1.23 

Kansas     .     . 

23.85 

1587 

1.70 

1.35 

Nebraska 

2445 

16.20 

1-95 

1-57 

California 

38.25 

23.45 

2.30 

1.86 

Oregon     .     . 

33-50 

2475 

1.92 

1.50 

Colorado  .     . 

36.50 

27.08 

2.21 

1.80 

J.  R.  Dodge,  Statistician. 


*  It  will  be  observed  that  the  foregoing  list  only  cov—rs  the  rates  of  wages  of 


112  WHAT  MAKES 

The  average  pay  of  common  laborers  in  the  census  year  varied 
from  $1  to  $1.50  for  the  working  days  of  the  year  ;  but  it  is  well 
known  that  the  daily  rate  cannot  be  considered  as  a  continuous 
rate  throughout  the  year.  The  average  earnings  of  common 
laborers  could  not  have  been  more  than  $400  a  year  ;  but  it  may 
perhaps  be  admitted  that  they  fairly  approximated  that  sum, 
again  sustaining  my  assumed  figures. 

It  therefore  follows  that  if  the  value  of  the  annual  product  ap- 

farm  laborers.     The  larger  part  of  the  whole  number  of  persons  listed  as  being 

engaged  in  agriculture  are  listed  as  fanners,  and  not  fami  laborers. 

The  total  number  employed  in  agriculture  is  ; 

Male 7.075.983 

Female 594,510 

Total 7,670,493 

It  is  probable  that  each  one  of  these  persons  stands  at  the  head  of  a  somewhat 
larger  group  than  the  average  group  of  2.90  in  all  arts,  and  that  not  less  than 
one  half  the  population,  or  25,000,000  persons,  were  wholly  dependent  upon 
this  agricultural  portion  of  the  working  force  in  the  census  year. 

The  primary  value  of  the  farm  product  of  1879  (subject  to  moderate  increase 
in  1880),  as  given  in  the  census,  is  $2,212,540,927,  but  the  census  experts 
point  out  the  necessity  of  adding  materially  to  this  sum,  to  cover  the  home  con- 
sumption of  the  farms. 

I  have  ventured  to  add  $1,000,000,000  to  this  computation  of  the  primary 
value,  in  order  to  cover  the  domestic  consumption  of  the  agricultural  popula- 
tion, which  never  appears  in  the  commercial  tables,  but  which  should  be  com- 
puted and  added  to  the  agricultural  product,  as  well  as  other  almost  necessary 
omissions  in  the  census  which  should  be  added  in  order  to  show  the  relation 
which  the  work  of  each  person  devoted  to  agriculture  bears  to  the  work  of  each 
person  engaged  in  other  branches  of  industry. 

This  was  also  an  a  priori  conclusion,  but  if  we  add  to  the  census  valua- 
tion $2,212,540,927,  the  sum  of  $1,000,000,000,  for  domestic  consumption,  and 
divide  by  the  number  of  persons  occupied,  7,670,493,  we  get  an  average  pro- 
duct of  a  fraction  less  than  $419  each,  again  fairly  corresponding  to  my  assumed 
average. 

It  will  be  observed  that  the  total  number  of  farms  was  4,008,907,  averaging 
substantially  seventy  acres  of  improved  land  each.  There  were  substantially  one 
farmer  and  one  laborer  to  each  farm,  and  it  therefore  appears  that  the  average 
farmer  can  be  assumed  to  earn  but  a  moderate  sum  above  that  of  the  farm 
laborer. 


THE  RATE  OF  WAGES?  II3 

proximated  $10,000,000,000,  the  average  wages  of  earning  people 
must  have  approximated  $432  a  year  ;  and  upon  what  this  sum 
would  purchase  nearly  three  (2.90)  persons  were  on  the  average 
sustained.  This  gives  $147  per  year,  or  40  cents  a  day  to  each 
person.  That  is  to  say,  each  person  on  the  average  was  sub- 
sisted, sheltered,  and  clothed  on  what  40  cents  a  day  would  buy 
from  that  part  of  the  commercial  product  available  for  wages. 

If  such  was  the  measure  in  money  of  all  that  was  produced, 
which  could  be  made  subject  to  division  or  commercial  distribu- 
tion, then  it  will  be  apparent  that  there  could  be  no  greater  sum 
or  money's  worth  to  be  divided.  If  any  less  part  of  the  product 
had  been  set  aside  for  profits  or  increase  of  capital  than  that 
which  I  have  assigned  hitherto,  then  the  increase  of  capital  would 
have  been  checked,  and  the  production  of  the  next  and  of  ensuing 
years,  in  ratio  to  the  number  of  existing  persons,  would  have  suf- 
fered. 

There  can  be  no  general  rise  in  the  rates  of  wages,  except 
by  means  of  an  increase  in  the  quantity  of  things  produced, 
coupled  with  the  maintenance  of  the  prices  at  which  such  products 
can  be  sold.  There  may  be  an  increase  in  the  general  welfare, 
by  way  of  an  increase  in  the  quantity  of  things  produced,  coupled 
with  a  decrease  in  price,  which  shall  not  affect  the  gross  value 
of  the  whole,  so  that  the  rate  of  wages  may  buy  more  commodi- 
ties ;  or,  in  other  words,  may  represent  a  larger  quantity  of 
things.  There  may  be  increase  in  the  general  welfare  brought 
about  by  the  increase  in  quantity  and  decrease  in  price,  coupled 
with  a  decrease  in  the  money  rate  of  wages,  if  such  a  decrease  in 
the  rate  of  wages  does  not  go  below  the  decrease  in  prices. 

I  have  before  referred  to  the  burthen  of  excessive  taxation, 
but  this  point  cannot  be  too  often  pressed.  So  far  as  the 
proceeds  of  taxation  are  expended  for  just  administration,  for  a 
good  government,  wisely  and  honestly  administered  ;  or  in  mu- 
nicipal affairs,  so  far  as  the  avails  of  taxation  are  expended  in 
the  maintenance  of  good  highways,  of  sewers,  in  providing  an 
adequate  water  supply,  and  in  sustaining  the  common  schools, — 


114  WHAT  MAKES 

taxation  cannot  be  considered  a  burden,  but  is  a  distribution  of 
a  part  of  the  annual  product,  for  the  common  welfare  and  for 
the  general  benefit.  But  so  far  as  the  proceeds  of  taxation  are 
wasted  or  misspent,  then  taxation  becomes  an  intolerable  bur- 
den, and  it  must  be  gauged,  not  by  its  ratio  to  the  gross  product 
of  the  country,  but  by  its  ratio  to  the  net  income,  or  to  the  possible 
savings  of  each  person.  The  conviction  of  the  writer  is  that  all 
taxation  ultimately  falls  upon  consumers,  in  the  ratio  of  their  con- 
sumption, no  matter  where  the  taxation  is  first  laid,  whether  it  be 
a  direct  tax  upon  real  estate,  or  an  indirect  tax  upon  certain  speci- 
fied articles.  If  a  tax  is  laid  upon  real  estate  occupied  for  com- 
mercial purposes,  it  becomes  a  charge  upon  the  distribution  of 
the  goods.  If  it  is  levied  upon  land  used  for  agricultural  pur- 
poses, it  enters  into  the  money  cost  of  production.  If  it  be  ad- 
mitted that  taxes  are  borne  in  the  ratio  of  consumption,  and  that 
producers  are  merely  the  agents  for  their  collection,  even  very 
heavy  taxes  may  constitute  no  real  burden  upon  persons  who  are 
in  the  possession  of  large  property  or  large  incomes.  They  may 
be  but  a  light  burden  upon  persons  of  moderate  means  or  mod- 
erate income  ;  but  when  they  either  restrict  the  consumption  of 
the  necessaries  of  life,  or  take  from  working  people  the  little  mar- 
gin which  might  be  saved,  they  become  intolerable, — if  they  are 
either  unjust  or  unnecessary. 

If  the  estimate  of  the  salable  or  exchangeable  value  of  our 
annual  product  which  I  have  assumed  in  this  treatise  is  even  ap- 
proximately correct,  then  eight  per  cent,  upon  such  exchangeable 
value,  aggregating  $9,000,000,000,  is  distributed  by  way  of  taxa- 
tion,— the  aggregate  of  the  National,  State,  County,  City,  and 
Town  taxes  in  the  census  year  having  exceeded  $700,000,000 

If  I  have  set  aside  a  sufficient  sum  to  represent  profits,  to  wit  : 
ten  per  cent,  of  the  total  product,  half  being  assigned  as  the  prof- 
its of  capital,  and  half  being  assigned  as  the  savings  of  those 
who  perform  the  work  of  distribution  or  production,  $900,000,000 
in  all,  then  the  taxes  of  1880  bore  the  ratio  of  eighty  per  cent,  to 
the  probable  savings  of  the  country.     If  it  may  have  been  possible 


THE  RATE   OF   WAGES t  II5 

in  some  one  extremely  prosperous  year  since  the  war,  to  set  aside 
fifteen  per  cent.,  or  $1,450,000,000,  still  the  actual  taxes  bore 
the  ratio  to  this  sum  of  fifty  per  cent.  Now,  if  it  be  true  that 
nine  tenths  or  more  of  all  who  are  engaged  in  gainful  oc- 
cupation must  subsist,  save,  and  pay  taxes  out  of  an  average 
income  of  $400  to  $500  a  year,  and  if  of  this  sum  $32  to  $40 
must  be  set  aside  to  meet  the  heavy  taxation  of  this  country, 
it  follows  that  such  a  burden  may  not  only  deprive  a  very 
large  portion  of  the  working  people  of  this  land  of  the  op- 
portunity to  save  any  thing,  but  may  even  take  from  very  many 
of  them  a  part  of  that  which  is  necessary  even  for  a  com- 
fortable subsistence.  It  follows  that  the  man  upon  whom  the 
burden  of  taxation  falls  heaviest  is  he  who  possesses  no  property 
whatever.  It  finds  him  poor,  it  keeps  him  poor,  and  it  may  even 
reduce  him  to  pauperism  ;  yet  he  may  never  know  the  cause  of 
his  poverty,  and  may  resist  the  very  changes  in  the  system  of 
taxation  which  would  benefit  him  most.  The  writer  is  of  the 
profound  conviction  that  whenever  the  subject  of  taxation  is  re- 
duced to  a  science,  taxation  on  real  estate  will  become  the  source 
of  nearly  all  taxes.  A  tax  on  real  estate  cannot  be  evaded  ;  it  dif- 
fuses itself  with  unerring  certainty  ;  it  forces  unoccupied  land  into 
productive  use  ;  it  compels  the  most  conservative  class  in  the 
community  to  take  an  active  part  in  true  politics,  and  to  watch 
the  expenditures  of  the  Government,  whether  national.  State,  or 
municipal,  with  the  closest  scrutiny.  Such  a  tax  may  perhaps  be 
supplemented  by  taxation  on  railways,  gas  companies  or  other 
franchises  which  are  somewhat  restricted  in  their  nature  and  by 
an  excise  on  spirits  collected  from  the  producer  ;  but  this  opens 
a  broad  subject  outside  the  scope  of  this  treatise. 

I  am  aware  that  some  observers  compute  the  value  of  our  an- 
nual product  at  a  larger  sum  than  I  do,  but  on  the  basis  of  the 
population  of  1880  and  the  data  of  that  year,  I  can  find  no  trace 
of  larger  earnings  or  greater  profits  than  my  computation  would 
have  yielded. 

No  one  can  be  more  aware  than  the  writer  of  the  huge  difficul- 


Il6  WHAT  MAKES 

ties  which  occur  in  computing  the  accumulated  wealth  of  the 
country  or  the  value  of  the  annual  product,  in  terms  of  money. 
It  can  only  be  by  bringing  these  vast  aggregates  to  individual 
units  that  an  estimate  can  be  made  with  even  approximate  ac- 
curacy. Attention  has  often  been  called  in  the  treatises  upon 
political  economy  to  the  small  proportion  which  the  aggregate 
value  of  accumulated  wealth  necessarily  bears  to  the  money 
value  of  the  annual  product.  Owing  to  the  method  of  taxation, 
to  the  various  official  returns  of  the  States  and  cities,  and  to  the 
great  skill  of  Mr.  Carroll  D.  Wright,  by  whom  the  census  of  1875 
was  taken,  the  actual  money  value  both  of  land  and  of  the  capital 
which  has  been  placed  upon  the  land  in  the  State  of  Massachu- 
setts can  be  ascertained  with  almost  absolute  certainty.  So,  also, 
the  value  of  the  annual  product  of  Massachusetts  can  be  approxi- 
mated with  almost  absolute  certainty.  By  these  figures,  it  appeared 
that  the  absolute  value  of  all  the  capital  of  the  State  of  Massa- 
chusetts in  1875,  /.  e.y  of  the  mills,  workshops,  railroads,  dwell- 
ings, goods,  and  wares,  which  had  been  converted  into  form  for 
human  use  by  human  work,  did  not  exceed  three  years'  annual 
production.  If  the  data  of  the  census  of  the  United  States  could 
be  treated  in  the  same  exhaustive  way,  and  the  value  of  the  land 
could  be  deducted  from  the  gross  sum  of  $44,000,000,000,  given 
as  the  estimate  of  wealth,  it  would  without  doubt  appear  that  the 
actual  capital  of  the  country  could  not  exceed  twice  or  twice  and  a 
half  the  value  of  its  annual  product.  When  the  complaint  is  made 
that  a  good  subsistence  and  an  adequate  shelter  can  barely  be 
obtained  by  each  three  persons  upon  an  average  income  of  only 
$400  to  $500  a  year,  at  the  retail  value  of  all  they  consume  of 
their  own  production,  or  procure  by  purchase  or  exchange  for  the 
three,  the  only  remedy  which  can  be  provided  is  to  increase  the 
product.  If  such  is  the  present  measure  of  all  there  is,  then  such 
is  the  measure  of  the  utmost  that  all  can  have.  How  difficult  and 
how  slow  such  an  increase  must  be,  may  be  comprehended  by  a 
very  simple  statement  :  Assuming  the  maximum  of  $10,000,000,- 
000  given  in  this  treatise  as  the  present  value  m  the  census  year,  or 


THE  RATE   OF    WAGES?  WJ 

about  11,500,000,000 — now  then  over  $1,000,000,000  worth  of  pro- 
duce must  be  added  in  a  year  and  the  prices  must  be  maintained 
where  they  are,  in  order  that  each  person  of  our  present  population 
may  have  five  cents  a  day  more  than  they  now  do,  or  in  order  that 
each  person  engaged  in  any  kind  of  gainful  occupation  may  be 
able  to  obtain  an  increase  in  the  rate  of  wages  of  fifteen  cents  a 
day.  Upon  such  small  fractions  must  subsistence  depend,  and 
when  political  leaders  present  magnificent  pictures  of  national 
progress,  summed  up  in  thousands  of  millions  of  wealth  or  pro- 
duct, these  facts  may  well  be  recalled. 

Even  if  our  progress  has  been  great  and  our  conditions  are 
relatively  prosperous  compared  to  other  nations,  yet  the  average 
person,  including  capitalists,  landowners,  employers  and  em- 
ployed must  have  been  sustained  and  sheltered,  must  have  paid 
taxes  and  saved  profits,  out  of  what  fifty  cents  a  day  would  buy 
in  the  census  year,  because  such  was  apparently  the  measure  of  all 
there  was  produced  which  could  be  bought  and  sold  or  exchanged. 

APPROXIMATE    SUMMARY. 

Total  product  of  the  U.  S.  $10,000,000,000,  worth  per  day 
to  each  person  as  estimated     .         .         .         .         .         .55 

Domestic  production,  consumed  without  purchase  or  sale  .         5 

50  cts. 

Share  of  capitalists  2\ 

Savings  of  the  people  .......       2^ 

National,  State,  and  Municipal  taxes  .         .         .         .       sf 

Cost  of  mental  or  administrative  work        .         .         .         .       I^ 

Average  to  each  wage  earner 40 

50  cts. 

For  each  error  of  five  cents  a  day  in  this  estimate, — if  the  reader 
finds  one  or  believes  that  there  may  be  an  underestimate — add 
one  thousand  and  fifty-eight  million  five  hundred  thousand  dollars 
to  my  gross  estimate  and  divide  the  proceeds  among  the  58,000,- 
000  persons  who  will  probably  constitute  our  population  on  the 
ist  Jan.,  1885. 


APPENDIX   11. 


THE    LAW    OF    COMPETITION  :     IN    ANY    GIVEN    PRODUCT,    PROFITS 
DIMINISH,    WAGES   INCREASE. 

The  following  deductions  have  been  made  from  the  accounts 
of  two  New  England  cotton  factories,  both  constructed  prior  to 
1830,  and  operated  successfully  and  profitably  since  that  date, 
mainly  on  standard  sheetings  and  shirtings — No.  14  yarn.  The 
figures  given,  from  1840  to  1883  inclusive,  are  absolute,  being 
taken  from  the  official  accounts  of  mills,  of  which  the  sole  pro- 
duct has  been  a  36-inch  standard  sheeting.  The  figures  of  1830 
are  deduced  from  a  comparison  of  the  data  of  two  mills.  The 
figures  of  1884  are  deduced  from  nine  months'  work  in  1883-4. 

WAGES   PER   OPERATIVE   PER   YEAR. 


1830 

164.  gold. 

1840 

175-  gold. 

1850 

jgo.  Rold. 

J  860 

J97.  gold. 

1870 

275-  cur. 

1870 

240.  gold. 

i£8o 

259.  gold. 

1883 

287.  gold. 

1884 

290.  gold. 

PROFIT   PER 

1830 

8.400.  gold. 

J  840 

1. 181  gold. 

1850 

1. 110  gold. 

,860 

.638  gold. 

1870 

.760  cur. 

1870 

.660  gold. 

1880 

.481  gold. 

1883 

•434  gold. 

1884 

.408  gold. 

PROFIT   PER   YARD  NECESSARY   TO   BE   SET   ASIDE   IN   ORDER   TO    PAY    lO   PER   CENT.    ON 

CAPITAL   USED. 


THE  RATE  OE  WAGES, 


119 


YARDS   PER   OPERATIVE   PER   YEAR. 


.830 

■♦.3«i 

t840 

9,607 

1850 

12,164 

)86o 

21,760 

■  870 

19,293 

1S80 

28,000 

1883 

26,641 

.884 

28,032 

1830 

lOoog-old. 

1840 

1.832  gold 

1850 

1.556  gold 

i860 

.905  gold 

1870 

1.425  cur. 

1870 

1.240  gold 

1880 

.930  gold 

1883 

1.080  gold 

1884 

1.070  gold 

Changes  in  the  ma 

cbinery  affected 

productioD. 


COST    OF   LABOR    PER    YARD. 


COMPARISON    OF    1840    WITH    1883-4. 

This  comparison  will  not  show  the  full  reduction  in  the  coaw 
of  labor  per  yard  which  may  be  expected  in  1884-5,  because 
changes  have  been  in  progress  which,  when  completed,  will  in- 
crease the  capacity  of  the  mill  about  15  per  cent.,  and  it  is  a  well- 
understood  rule  that,  while  such  changes  are  being  made,  the 
current  work  of  production  is  done  at  a  disadvantage. 


I 840-1 884. 


I.— Capital    .    . 

II.— Fixed  capital 
III.— Active  capital 
IV.— Spindles  .    . 

V. — Looms     .    . 

VI.— Fixed     capital 

per  spindle 
V'll.— No.  of  opera. 

tives  emp, 
VIII.— Operatives  per 
1,000  spindles 


1840 
1883 
1840 
1883 
1840 
1883 
1840 
1883 
1840 
1883 
1840 
1883 
1840 
1883 
1840 
1883 


$600,000' 

$600,0001 

$310,000 « 

$310,0001 

$290,000 1 

$290,000  ■ 

12,500  • 

30,824 « 

425" 

i,ooo< 

$23.20 1 

$io.c6  ■ 

530- 

527" 

42  4-10  ■ 

x^  aoxoo  ■ 


i  Same. 
(Same. 


Same. 

(    Increase, 
I  146  per  cent- 

[     Increase, 
I  13s  per  cent. 

[  Decrease, 
I  57  per  cent. 

I     Same. 

Decrease, 
60  per  cent. 


120 


IVffA  T  MAKES 


IX.— Lbs.  per  spin-  1840          0.456  ^——■^■——— -^^^  <    Increase 

die  per  day  .  1883           0.556  ■— — — — ■  \  22  per  cen 

X.— Lbs.  per  oper-  1840  10  76-100 —i^"^—^^^  (     Increase 

ative  per  day  1883  31  20-100  a^i^^^— 1— — ■— i^— ■^— ^^^-^^^^i^  )  190  per  ce 

XL— Hours      work  1840          + 13  ■^-■— — ^"'■■■"  (    Decreast 

per  day     .    .  1883               11  -■— — — ^  1  15  per  cer 

XIL— Lbs.  per  oper-  1840             0.83 1^—^——  i     Increase 

ative  per  hour  1883             2.83  — — ^— —  j  240  per  ce 

XIII.— Wages  per  op-  1840            $175                            -1— i^—  r     increase 

erative  pr.  y'r  1883            $287  ■■«— ^-^——^^^—i — ^^-^  \  64  per  cer 

XIV.— Wages  per  op-  1840  4.49  cts.  — — — — ^— ^^^  ■     Increase 

erative  pr.  h'r  1883  8.80  cts.  ■^■^—  1  96  per  cer 

XV.— Wages  per  y'd  1840  1.82  cts  Dccrea 

1883  1.08  cts.  -------------------------  41  per  ce 

XVI.— Profit  per  y'd  1840  1.18  cts.  ^^^^^^^-^i^^— ^^^b^^—  i    Decreas< 

10  per  ct.  on  capital  1883  0.43  cts.  ^^^^^^—  1  63  per  cer 

XVII.— Price  of  goods  1840  g.04  cts. —— ■^^^— ^^^n^^^^— i»  i     Decreas 

cost  cotton  same  1883  7.04  cts.  ^"i^i—i""™— ■—■—■«  \    22  per  ce 

COMPARISON    OF    1830    WITH    1884. 

In  this  comparison  the  statements  are  based  in  part  upon  the 
figures  of  each  mill.  Both  appear  to  have  cost  about  $40  per 
spindle,  including  dwellings  for  operatives.  More  than  one  kind 
of  goods  were  made  in  each  for  a  time,  but  the  figures  have  been 
adjusted  to  standard  sheetings,  an  average  having  been  computed 
by  the  yard  and  pound 

Fixed  capital 1830      $332,000  ,gammmmmmmmm^m^m^mmmmi^^m^^mmmmm^tmmmmt^mm   DccrcaS 

1884      $310,000  mimmmmmmmmmmmmmmmmmi^mmmm^mmm^^m^^mmmmmmm,    37   per  CC 

Spindles . 1830       8,192     ^wm^^hb  Increas( 

1884       30,824       mi^^m^i^mmmm^m^mimmmm^amm^a^mi^m^^^^mm   276  per  C« 
Fixed  capital  per  spindle  1830        $40.50     ^mmam^mtmmmam^mmmmmmmmmmm^  Decrea£ 

1884      $10.07    ■""■"■  75  per  cc 

Operatives  per  1,000  spindles    1830         49       „,__,.„,„_,_,__._i.,,aaaMHM  Decrea< 

1884       172-10    ^m^^m^mmam  64  per  C( 

Pounds   per  operative   per    1830        9.94     mmmmmm^mmm^^^  Increasi 

day 1884  31.22       mmmmim^mmmmmmmmmmmmm^^mmm^immm^mi^t^t^mmii/^^^tXCf. 

The  hours  of  labor  in  most  of  the  factories 
in  1830  were  14  per  day. 
Wages   per    operative   per    1830       $164     aMHHMMBMHHH^B^^^B  Increas 

year 1884        $290     a-MiBiaiBBBM^iMBBBBiBiHaaH^aMaHMi.  77  per  C( 

The  wages  per  hour  in  1884  are  more  than 
double  those  of  1830. 

Wages  per  yard 1830      1.90  cts.   ^mmmmmmm^^mmmimm^mmmam^mm  Decrea! 

1884      1.07  cts.   ^mmmma^^mm^mmm  44  per  C( 

Profit  per  yard  at  lo  per  .    .     1830    2.40  cts.  tmam^^^^^^^^^mmmmmmmmmmtmmmmm  Decrea! 

cent,  on  capital     ....    1884      .41  cts.  mmm^mm  83  per  c< 


THE  RATE  OF   WAGES?  121 

lii  the  mountain  section  of  the  southern  United  States  the  peo- 
ple are  still  clad  in  homespun  fabrics.  Five  women — two  carders, 
two  spinsters,  and  one  weaver — can  produce  eight  yards  per  day. 

Product  of  s  per- 
soijs  I  year  in      2,400 
North  Carolina      yds.     ■■ 

Product  of  5  per- 
sons   in    New    140,000 

England   .      .      .  yds.      m^^^^^^^mmmm^mmmmmmmmi^mmm^^^m^mmmmm^mi^m^i^mmmmmmmimmmmm^mm 

Wages    in    New 

England   at 

1.80  cents,   per 

yard    ....    $287.00  ^i^^-^— — i^^^^^^— i«— ^-^■^^— — i— -— — ■ 
Wages    as    they 

would  be  in  N. 

Carolina    at 

1.08  cents,  per 

yard    ....      $5.19    " 
Cost  per  yard  in 

New    England 

at  $287  per  year 

each  operative      1.08c.    ■■ 
Cost  in  N'th  Car- 
olina   at    $287 

per  year  each 

operative        .      .      58.49c.    wi^^^^mmmmmmmmmmmmmmmmmmmmmmmmmmmimm^^mmmmmm^m^^^mmmmmmB^^m,^ 

The  rule  of  diminishing  rates  of  profit  and  increasing  rate  of  wages,  of  neces- 
sity ensuing  from  ihe  progress  of  invention,  is  fully  sustained  by  these  tables. 
As  the  capital  is  increased  both  in  its  quantity  and  in  its  effectiveness,  the  abso- 

Ilute  share  of  product  falling  to  capital  is  increased,  but  the  relative  share  is 
diminished.    On  the  other  hand,  the  share  of  the  laborer  is  increased,  both  abso- 
lutely and  relatively.     Labor  takes  of  necessity  a  constantly  increasing  propor- 
•  tion  of  an  increasing  product.     In  this  example,  the  wages   of  the  operatives 

have  increased,  since  1840,  64  per  cent,  per  day  and  96  per  cent,  per  hour  ; 
since  1880,  77  per  cent,  per  day  and  +  100  per  cent,  per  hour.  High  wages  in 
money  hr.ve  ensued  as  the  necessary  result  of  the  low  cost  of  labor. 

It  will  be  observed  that  in  1840  the  price  of  standard  sheetings  being  9  cents 
a  yard  it  required  1.18  cents  to  be  set  aside  for  profits,  or  13  per  cent,  of  the 
price,  in  order  to  pay  10  per  cent,  upon  the  capital.  Next  it  required  1.83  cents 
to  be  set  aside,  being  20  per  cent,  of  the  whole  price,  to  pay  wages  at  the  aver- 
age rate  of  only  $175  a  year  to  each  operative.  In  1S84,  the  price  being  7  cents 
a  yard,  it  required  less  than  6  per  cent,  of  the  gross  sales,  0.40  cent  a  yard,  to 
beset  aside  in  order  to  pay  10  per  cent,  upon  the  capital,  while  1.07  cents  being 
*iet  aside  as  the  share  of  labor,  or  a  fraction  ovc*  ".5  per  cent,  of  the  gross  sales, 


122  WHAT  MAKES 

yielded  to  the  operative  $290  in  gold.  The  goods  cannot  now  be  sold  at  7 
cents,  and  there  is  little  or  no  profit  for  the  time  being.  But  while  10  per  cent, 
was  a  moderate  rate  of  profit  in  1840  it  is  an  excessive, rate  in  1884.  The  busi- 
ness would  extend  with  great  rapidity  if  there  were  a  positive  assurance  of  6  per 
cent,  upon  the  capital,  or  a  quarter  of  a  cent  a  yard  and  less  than  4^  per  cent, 
of  the  gross  amount  of  sales. 

But  it  may  be  said,  having  assigned  0.40  cent  to  profits,  and  1.07  cents  to 
labor  out  of  7  cents  a  yard  gross  value,  there  remain  5.53  cents  a  yard  to  be 
accounted  for.  This  of  course  represents  the  money  cost  of  cotton,  fuel,  starch, 
oil,  supplies,  taxes,  cost  of  administration,  transportation  of  the  goods  to  market, 
and  the  cost  of  selling  them  at  wholesale. 

Does  this  all  go  to  labor,  or  is  there  also  a  profit  to  be  set  aside  on  these 
elements  ? 

Our  space  would  not  suffice  to  treat  each  one  of  these  subjects,  but  it  may  be 
said :  First,  the  cotton  is  substantially  all  labor  ;  there  is  no  large  margin  of  profit 
at  the  present  time  in  raising  cotton,  which  is  mostly  produced  by  small  farmers. 
Second,  the  other  items  constituting  the  materials,  form  a  very  small  part  of  the 
total  cost,  and  are  subjected  to  profits  in  small  measure  only  in  respect  to  fuel 
and  oil. 

The  cost  of  transportation  yields  to  the  railroads  less  than  an  average  of  5 
per  cent,  on  the  capital  invested,  and  cotton  fabrics  pay  but  a  small  fraction  of 
their  value  even  for  very  long  distances.  The  cost  of  administration  constitutes 
a  very  small  part  of  the  cost  of  the  goods,  and  in  a  general  treatise  on  wages 
belongs  in  a  class  by  itself  rather  than  to  be  considered  as  profits.  The  charge 
for  selling  staple  plain  cotton  goods  at  wholesale  does  not  exceed  i  per  cent,  to 
\\  percent.,  and  a  large  part  of  this  is  distributed  among  the  clerks  and  salesmen 
who  do  the  work. 

If  the  subject  is  analyzed,  first,  as  a  whole,  and,  second,  in  each  department, 
it  will  appear  that  at  the  present  time  the  proportion  of  profit  which  can  be 
set  aside  from  the  sale  of  coarse  cotton  goods  sufficient  to  cover  profits  in  all 
the  various  departments  of  the  work,  is  less  than  10  per  cent,  of  the  wholesale 
market  value  of  the  product,  and  90  per  cent,  is  the  absolute  share  of  the  laborers 
who  do  the  work  both  in  respect  to  materials  used  and  to  the  finished  product. 

It  is  also  necessary  to  remember,  in  respect  to  the  cotton  factory,  that  the 
value  or  proportion  of  capital  to  a  given  product  is  greater  than  in  almost  any  other 
branch  of  industry  ;  the  proportion  of  capital  to  product  being  $[  of  capital  to 
each  $1  or  $1.50  of  product,  according  to  the  weight  of  the  fabric  and  the 
quantity  of  cotton  used.  In  the  boot  and  shoe  factory,  on  the  other  hand,  the 
ratio  of  capital  to  product  is  about  $1  to  $3;  therefore  in  the  boot  and  shoe  busi- 
ness a  much  less  proportion  of  the  gross  sales  needs  to  be  set  aside  as  profit  on 
the  business,  to  induce  its  being  established. 


THE  RATE  OF  WAGES?  1 23 

On  the  whole,  so  far  as  the  manufactures  of  New  England  are  concerned, 
the  average  of  capital  to  the  gross  value  of  the  products  is  one  dollar  capital  to 
two  dollars  product  ;  therefore  three  per  cent,  of  the  gross  sales  set  aside  as 
profit  will  yield  six  per  cent,  per  annum  upon  the  capital  invested  in  the  buildings 
and  machinery  which  are  applied  to  the  conversion  of  raw  or  half  manufact- 
ured material  into  finished  forms  ready  for  final  consumption. 

The  foregoing  charts  have  been  prepared  on  the  basis  of  tables 
giving  the  actual  facts  in  respect  to  the  machinery,  the  product, 
and  the  wages  of  two  successful  cotton-mills,  manufacturing  what 
are  known  as  standard  sheetings,  in  New  England.  Technically 
these  goods  are  known  as  36-inch  sheetings.  No.  14's.  In  point 
of  fact,  the  number  of  the  yarn  is  a  little  coarser.  The  data  have 
been  combined  so  as  to  cover  the  entire  period  from  1830  to  the 
present  date,  a  part  of  them  having  been  furnished  from  one  mill 
and  a  part  from  the  other.  I  have  in  my  possession  the  accounts 
of  many  other  cotton  factories,  and  the  statistics  of  the  wages, 
covering  a  great  variety  of  fabrics,  during  the  last  fifty  years  ;  but 
I  have  carefully  chosen  the  data  of  two  factories  which  have  been 
uniformly  successful,  in  which  the  capital  stock  has  never  been 
reduced,  and  of  which  the  product  has,  to  a  large  extent,  been 
sold  for  export.  This  selection  has  been  made  in  order  that  the 
data  might  not  be  affected  in  any  measure  beyond  that  of  other 
occupations  than  cotton-spinning,  by  the  many  changes  in  the 
tariff  which  have  been  made  since  1830. 

In  the  main  treatise  of  which  this  is  an  appendix,  I  have  at- 
tempted to  sustain  the  proposition  that  the  rate  of  wages  cannot 
be  taken  as  a  standard  for  determining  the  cost  of  production, 
even  in  money  ;  but,  on  the  contrary,  that  wages  are  a  remainder 
over,  or  result  of  production,  recovered  from  the  sale  of  the  goods, 
and  subject  to  the  prior  claim  for  payment  of  the  cost  of  materi- 
als and  the  profits  of  capital. 

Wages  will  vary  in  rate  in  the  same  country,  at  different  peri- 
ods, in  the  same  place  ;  at  the  same  period  in  different  places  ;  in 
different  countries  at  the  same  time, — being  determined  by  the 
distance  of  the  factory  from  the  source  of  the  materials,  by  the 


t24  WHAT  MAKES 

intelligence  and  skill  of  the  people  who  do  the  work,  by  the 
incidence  of  taxation,  (the  laws  of  different  States  varying  on 
this  point)  and  by  many  other  elements  which  enter  into  the 
problem.  On  the  other  hand,  although  wages  are  deferred  to 
profits,  and  are  a  remainder  over,  subject  to  deduction  of  profits 
from  the  sales,  yet  the  competition  of  capital  with  capital  not  only 
always  tends  to  a  minimum  of  profit,  but  also  to  an  increase  of  the 
product  in  ratio  to  the  amount  and  effectiveness  of  the  capital. 
Hence,  while  profits  tend  to  a  minimum,  wages  tend  to  a  maxi- 
mum. It  therefore  follows  that,  under  these  conditions,  wages 
constitute  an  increasing  proportion  of  an  increasing  product,  pro- 
vided markets  can  be  found  to  take  the  increase  without  a  reduc- 
tion in  price  corresponding  to  the  reduction  in  the  labor  which 
constitutes  the  true  cost.  In  point  of  fact,  very  few  nations  have 
learned  to  apply  machinery  to  the  arts  of  life, — a  larger  portion 
of  the  population  of  the  world  is  clad  in  homespun  than  in  mach- 
ine-made or  factory-made  fabrics.  I  have  lately  read  a  notice 
of  a  recent  report,  made  in  Manchester,  to  the  effect  that  nearly 
1,000,000,000  persons,  out  of  a  computed  total  of  1,400,000,000, 
may  be  considered  as  non-machine  using  nations,  clad  in  hand- 
made fabrics,  so  far  as  they  are  clothed  at  all.  In  the  United 
States,  machinery  is  applied,  on  the  whole,  more  effectively  than 
anywhere  else.  Hence,  although  prices  have  diminished,  they  have 
not  diminished  as  fast  as  the  labor  cost  of  production  has  been 
reduced.  Consequently,  wages  have  not  only  risen  in  rate,  but 
also  in  purchasing  power.  All  of  this  is  proved  by  the  figures 
of  the  charts  which  have  been  given  above. 

Between  the  two  extreme  dates  which  I  have  covered  in  the 
chart,  1830  and  1884,  the  cost  in  money  for  manufacturing  a 
coarse  cotton  fabric  has  been  reduced  more  than  one  half.  In 
the  same  period,  the  rate  of  profit  on  each  dollar  invested,  which 
sufficed  to  induce  the  construction  of  the  factory,  has  also  been 
reduced  one  half.  In  the  same  period,  each  unit  of  the  machinery 
itself  has  become  so  much  more  effective,  that  one  operative  will 
perform  three  and  a  half  times  the  work  in  eleven  hours  that  one 


THE  RATE   OF    WAGES?  1 2$ 

Operative  could  perform,  from  1830  to  1840,  in  thirteen  hours. 
Thus  it  has  happened  that,  while  capital  may  now  be  satisfied 
with  one  quarter  part  as  much  money  derived  from  the  sale  of 
the  product  as  it  formerly  secured,  wages  have  doubled  per  day, 
and  more  than  doubled  per  hour,  in  the  period  named.  From 
1830  to  1840  inclusive,  it  was  necessary  to  take  fourteen  per 
cent,  from  the  gross  sales  of  goods  in  order  to  pay  ten  per  cent, 
on  the  capital  of  the  factory.  From  1880  to  1884  inclusive,  six 
per  cent,  of  the  gross  sales  would  suffice  to  pay  ten  per  cent,  upon 
the  capital,  while  six  per  cent,  profit  would  now  be  more  nearly  a 
normal  rate. 

In  these  charts  I  have  treated  the  art  of  spinning  and  weaving 
cotton  by  machinery,  upon  what  are  called  the  self-acting  mules, 
spinning-frames,  and  power  looms.  We  may  contrast  the  con- 
ditions of  the  same  art,  at  the  present  time,  in  different  parts  of 
this  country.  In  the  heart  Of  this  country,  upon  the  hill-sides 
and  in  the  valleys  of  the  great  Allegheny  region,  in  Virginia,  in 
Kentucky,  in  Tennessee,  and  in  the  Carolinas,  there  is  a  popula- 
tion of  two  millions  or  more  of  people,  who  are  even  to  this  day 
chiefly  clad  in  homespun  fabrics,  of  which  the  yarn  is  spun  upon 
the  hand  spinning-wheel,  and  woven  upon  the  hand-loom.  These 
people  have  been  kept  in  isolation  by  the  surrounding  pall  of 
slavery,  until  a  very  recent  period.  Their  country  is  now  being 
opened  by  railroads,  and  the  art  of  making  homespun  fabrics  will 
soon  be  a  lost  art  among  them.  The  capacity  of  five  of  these 
persons — to  wit,  two  carders,  two  spinsters,  and  one  weaver,  in  a 
day  of  eleven  hours,  is  eight  yards  of  coarse  fabric,  heavier,  but 
of  more  open  texture,  and  therefore  more  quickly  woven  by 
machinery  than  the  standard  sheeting.  Five  operatives  in  a 
modern  factory  would  spin  and  weave  one  hundred-fold  as  much, 
or  eight  hundred  yards  a  day.  But  we  will  limit  the  comparison 
to  the  actual  product  of  standard  sheetings,  and  we  will  as- 
sume that  the  home  spinners  could  make  eight  yards  of  standard 
sheeting  in  a  day.  This  would  give  them  2,400  yards  as  the  pro- 
duct of  a  year,  against  140,000  yards  in  the  northern  factory. 


126  THE  RATE   OF   WAGES. 

The  cost  of  spinning  and  weaving  the  standard  sheeting  in  the 
northern  factory  in  1883  was  1.08  cents  per  yard.  If  the  south- 
ern operatives  were  obliged  to  sell  their  product  in  the  open  mar- 
ket at  the  same  rate  of  wages — that  is,  at  the  wages  which  could 
be  derived  from  1.08  per  yard,  the  total  earnings  of  the  five  in 
one  year  would  be  $25.92,  or  a  trifle  over  $5.00  each.  If  they 
were  content  with  the  profit  on  each  yard  which  yields  to  the 
northern  capitalist  ten  per  cent,  a  year,  it  would  be  .43  of  a  cent 
a  yard,  or  upon  2,400  yards  f  10.32.  The  total  wages  and  profits 
of  the  five  southern  operatives,  working  by  hand  for  one  year,  at 
the  standard  of  cost  and  profit  of  the  northern  cotton-mill,  would 
therefore  amount  to  $36.24.  On  the  other  hand,  in  order  that  the 
earnings  and  profits  of  the  southern  operatives  should  be  equal  to 
those  of  the  northern  operatives  and  owners  of  the  factories,  it  would 
be  necessary  that  the  homespun  fabric  should  sell  in  the  open  mar- 
ket at  about  ninety  cents  a  yard.  It  therefore  follows  that  the 
high  wages  of  the  northern  operatives  are  the  result  of  the  low 
cost  of  production,  and  that  if  the  southern  people  now  engaged 
in  the  art  of  homespun  work  can  find  other  work  to  do,  in  dealing 
with  the  abundance  of  timber,  in  saving  the  wild  fruits,  in  agricul- 
ture, or  in  the  many  other  branches  of  work  which  their  climate 
and  soil  open  to  them,  but  which  are  not  open  to  the  inhabitants 
of  the  Northern  States,  they  will  save  both  time  and  labor  by  an 
exchange  of  product,  and  by  becoming  inter-dependent,  rather 
than  by  remaining  isolated  and  independent.  And  this  is  what 
is  now  occurring.  As  soon  as  the  incubus  of  slavery  was  removed 
and  an  exchange  of  products  between  the  two  sections  of  the 
country  fairly  began,  each  found  that  it  could  serve  the  other  and 
and  that  slave-grown  cotton  was  no  longer  king. 


APPENDIX  III. 


In  order  to  test  the  rule  of  the  advance  in  the  rates  of  wages 
which  accompany  improved  methods  of  work  and  the  substitu- 
tion of  machinery  more  or  less  automatic  for  hand  work,  I  have 
compared  the  wages  of  two  branches  of  industry  employing  men 
almost  exclusively  in  special  arts  requiring  a  high  degree  of  skill, 
to  wit :  the  manufacture  of  pianos  and  the  manufacture  of  edge 
tools. 

In   one  piano  factory  of  the  highest  reputation  the  rates  of 

wages  of  five  classes  of  workmen  averaged 

In  1843 $562  per  year. 

In  1880 824    ••       •• 

In  another  larger  factory,  the  rates  of  wages  of  twelve  classes 

of  workmen  have  been  as  follows  : 

1853 $11-33  per  week  gold. 

i860 12.23    "        " 

1866 14.75    "        "      currency. 

1872 18.00    " 

1878 1466    '•        " 

1880 17.50    "        •'      gold. 

In  one  establishment  making  table  cutlery,  eight  classes  of 
workmen  averaged 

1859 $1.50  per  day. 

1880 2.15     " 

In  another  on  edge  tools,  ten  classes  of  workmen  averaged 

1850 •         .         .      $1.60  per  day. 

1880 2.26    "      " 

In  these  examples  the  law  of  increasing  wages  is  demonstrated, 
but  there  is  no  such  unit  in  these  arts  as  the  standard  sheeting, 
and  I  am  unable  to  show  how  much  the  ratio  of  profit  has  di- 
minished. 

137 


128  THE  RATE  OF   WAGES. 

In  fact,  no  other  standard  can  be  found  like  the  standard  sheet- 
ing, as  it  has  been  manufactured  in  precisely  the  same  way  since 
it  was  first  introduced  more  than  fifty  years  ago. 

Even  the  statistics  of  the  cost  in  money  of  the  standard  sheet- 
ing fail  to  show  the  true  progress  of  the  operatives.  In  1830  and 
1840  the  machinery  was  much  less  automatic  than  it  is  now,  and 
its  operation  called  for  a  high  grade  of  intelligence.  From  1830 
to  1850  the  larger  portion  of  the  factory  operatives  were  well-bred 
American  women,  graduates  of  the  common  schools,  capable  of 
writing  the  articles  in  the  Lowell  Offering.  But  to  them  the 
factory  gave  opportunity  for  progress,  even  though  the  hours  of 
work  were  13  to  14  per  day  and  the  work  itself  was  arduous  and 
continuous.  The  operatives  who  now  earn  nearly  twice  as  much 
per  day  of  10  to  11  hours  and  more  than  twice  as  much  per  hour 
are,  through  no  fault  of  their  own,  less  instructed  and  less 
capable  of  doing  work  which  requires  versatility  and  individual 
capacity.  They  are  mostly  foreign-born.  American  women  have 
gone  up  into  more  congenial  employments  at  higher  wages,  which 
have  been  opened  to  them  by  the  application  of  machinery  to 
many  arts  which  were  mere  handicrafts  a  few  years  since,  and 
they  have  thus  made  room  in  the  textile  factories  for  the  Cana- 
dian, Irish,  English,  and  German  immigrants,  who  now  constitute 
the  greater  portion  of  the  operatives. 

Yet  it  will  be  observed  that  notwithstanding  all  these  changes 
in  the  quality  of  the  operatives,  the  improvement  in  the  quality 
of  the  machinery  has  caused  the  share  of  the  laborer  to  increase 
as  steadily  as  the  share  of  the  capitalist  has  diminished  ;  and  this 
progress  has  continued  in  spite  of  all  the  chances  and  changes  of 
meddlesome  legislation. 


APPENDIX  IV. 


Since  this  treaties  was  completed  the  invaluable  report  of  the 
statistics  of  labor  in  Massachusetts  for  1884,  compiled  by  Carroll 
D.  Wright,  has  been  published. 

It  gives  me  another  opportunity  to  prove  the  accuracy  of  my 
deductions. 

In  my  treatise  I  worked  from  an  a  priori  estimate  of  the 
value  of  the  total  product  of  the  United  States. 

I  deduced  a  value  not  exceeding  ten  thousand  million  dollars 
in  the  census  year  ending  June  30,  1880,  by  estimating  the  sev- 
eral crops  in  quantity  and  in  money.  First. — By  converting  that 
portion  of  the  wheat  crop  which  is  consumed  in  the  United 
States  into  bread,  and  a  large  portion  of  the  com  into  meat 
ready  for  final  consumption,  and  to  this  secondary  or  final 
form  I  applied  the  average  retail  prices.  I  also  ascertained 
as  nearly  as  possible  the  ultimate  value  of  dairy  products  and  the 
like.  Second. — I  converted  the  known  quantity  of  textile  fibres 
consumed  within  the  limits  of  the  United  States,  into  fabrics,  and  I 
then  estimated  these  fabrics  at  their  value  in  finished  clothing  at 
the  average  prices  which  are  charged  by  shopkeepers.  Third. — 
J I  converted  the  known  production  of  metals  into  machinery  and 
^  other  forms  ready  for  final  use,  and  valued  them.  Fourth. — I 
"^  valued  the  timber  product  as  furniture,  dwelling-houses,  and  the 
like.  Fifth. — I  converted  the  sum  of  our  imports  into  a  value  at 
its  final  point  of  consumption  by  estimating  the  cost  of  distribu- 
tion and  by  other  similar  methods. 

Of  course  this  method  is  one  which  could  not  be  made  abso- 
lutely correct,  especially  by  a  private  person  working  only  in  the 
intervals  of  active  business.     The  conclusion  was  warranted  in 

129 


130  WHAT  MAKES 

my  own  judgement  by  deductions  from  such  facts  as  I  could  as- 
certain. I  should  not  however  have  ventured  to  make  use  of  this 
estimate  in  a  scientific  treatise,  except  its  conclusions  could  be 
sustained  by  induction  from  the  facts  taken  in  detail. 

By  dividing  my  final  estimate  by  the  ascertained  number  of 
persons  who  were  engaged,  my  a  priori  conclusion  was  that  the 
average  group  of  three  persons,  there  being  one  person  occupied 
for  gain  including  the  administrative  as  well  as  the  executive 
force  in  each  2.90,  would  come  into  the  possession  of  substance 
not  exceeding  in  value  $523,  from  which  sum  all  profits,  taxes, 
and  wages  must  be  derived. 

Upon  a  further  analysis,  a  subdivision  of  this  average  sum 
which  included  ten  per  cent,  estimated  to  be  consumed  directly 
upon  the  farms  without  going  into  the  commercial  stage,  I  found 
reason  to  assign  to  each  one  of  those  engaged  in  the  work  of 
administration,  that  is  in  the  mental  rather  than  the  manual  work, 
an  income  averaging  between  $1,000  and  $1,100  a  year,  which 
being  deducted  left  an  average  to  each  person  engaged  in  the 
actual  executive  work  of  the  country  of  between  $430  and  $450 
a  year. 

It  being  assumed  that  each  one  of  the  latter  class  represented 
^iW  persons,  each  person  could  enjoy  only  what  $147  a  year 
would  buy,  or  in  the  last  analysis  what  40  cents  a  day  will  buy  ; 
that  is  to  say,  if  my  estimate  were  correct,  each  member  of  a  work- 
ing man's  family  must  find  shelter,  subsistence,  clothing,  and  fuel 
on  what  40  cents  a  day  will  buy,  because  such  is  the  measure  of 
the  total  product  after  setting  aside  five  per  cent,  as  the  annual 
profit  of  the  capitalist,  and  five  per  cent,  more  representing  the 
small  savings  of  the  working  people. 

In  other  words  my  deductions  a  priori  were,  that  the  average 
share  of  the  total  product  falling  to  each  woman  and  child  in  the 
United  States  in  the  census  year,  including  the  domestic  con- 
sumption of  farmers'  families,  could  not  exceed  what  55  cents  a 
day  would  buy.  Of  this  sum  I  assumed  that  5  cents  worth  would 
be  the  domestic  consumption  of  the  agricultural  population,  leav- 


THE  RATE  OF   WAGES?  I3I 

ing  50  cents  a  day  as  the  average  to  each  from  that  part  of  the  pro- 
duction which  was  bought,  sold,  or  exchanged.  Five  per  cent,  or 
2j  cents  a  day  set  aside  as  the  profits  of  capitalists,  and  five  per 
cent,  more  or  2\  cents  a  day  as  the  savings  of  the  people,  left  45 
cents  per  day  to  be  divided  among  the  working  people  and  the 
administrative  force.  Again  subdividing  this,  and  the  apparent 
share  falling  to  the  family  of  each  member  of  the  administrative 
force  seemed  to  be  90  cents  to  $1.00  per  day,  leaving  to  each 
member  of  each  working  man's  family  40  cents. 

All  these  computations  were  antecedent  to  any  examination  or 
test  by  consideration  of  actual  rates  of  wages.  They  were  de- 
duced as  the  necessary  result  of  the  division  of  a  total  annual 
product  estimated  by  entirely  different  methods  than  by  compu- 
tation of  actual  wages. 

If,  then,  40  cents  a  day  be  the  average  of  the  whole  country, 
the  proportion  falling  to  the  agricultural  population,  especially  of 
the  South  and  parts  of  the  West,  would  be  less.  The  proportion 
falling  to  the  manufacturing  population  of  the  North  would  be 
greater.     What  then  were  the  facts  ? 

I  have  shown  how  far  these  figures  coincided  with  the  statistics 
of  the  average  wages  given  in  the  United  States  census,  and  now 
have  the  satisfaction  of  comparing  them  with  the  facts  elicited 
by  Mr.  Wright  in  the  manufacturing  State  of  Massachusetts. 

Omitting  common  laborers,  domestic  servants,  and  the  like,  he 
has  ascertained  the  average  income  of  all  persons  engaged  in 
various  branches  of  manufacture  to  which  machinery  is  applied 
in  largest  measure,  or  which  require  special  skill.  The  list  of  oc- 
cupations comprises  the  making  of  agricultural  implements,  of 
tools,  boots  and  shoes,  clothing,  textile  fabrics,  furniture,  persons 
engaged  in  the  building  trades,  in  the  making  of  liquors,  ma- 
chinists, printers,  makers  of  wooden-ware,  and  some  other  minor 
branches. 

He  finds  the  average  wages  of  these  persons  in  1883,  when  they 
were  somewhat  higher  than  in  the  census  year,  to  have  been 
$10.31  per  week,  or  $536.12  per  year. 


132  WHAT  MAKES 

It  will  be  observed  that  this  list  does  not  include  the  domestic 
servants,  common  laborers,  or  persons  engaged  in  agriculture, 
even  in  Massachusetts  itself,  whose  wages  would  bring  down  the 
average  of  the  whole  if  they  were  included. 

His  results,  even  to  this  extent,  may  therefore  be  considered  as 
fairly  corresponding  with  the  deductions  made  by  myself,  but  the 
most  conclusive  proof  of  the  accuracy  of  my  deductions  will  be 
found  in  the  treatment  of  what  he  calls  the  "  budgets  "  of  nine- 
teen selected  families  assumed  to  represent  the  average  of  skilled 
workmen  ;  the  expenditures  of  400  families  having  been  analyzed 
in  the  preceding  year  with  which  these  "  budgets  "  correspond. 

These  families  comprise  ninety-nine  persons,  of  whom  forty-one 
are  engaged  in  some  kind  of  gainful  occupation — /.  ^.,  earning 
wages.  Each  working  member  of  this  small  force  therefore  repre- 
sented a  group  of  2.17,  as  against  the  average  of  2.90  in  the  whole 
country.  The  average  income  of  each  one  of  these  persons  was 
$372  a  year,  somewhat  less  than  the  average  which  I  have  as- 
signed to  each  person  in  my  estimate,  but  when  we  convert  the 
$372  per  year  into  so  much  a  day  for  each  person,  the  result 
gives  forty-seven  cents  a  day,  in  Massachusetts,  in  arts  conducted 
mainly  by  machinery,  against  my  estimate  of  forty  cents  for  the 
average  of  the  whole  country,  the  group  2.17  being  smaller. 

It  therefore  follows  that  by  every  method  of  computation,  and 
by  every  test  which  can  be  applied,  my  deductions  are  sustained. 

It  appears  that  even  in  the  most  prosperous  State,  the  average  in- 
come on  which  each  person  must  subsist,  find  shelter,  pay  taxes,  and 
make  savings,  even  in  arts  requiring  a  high  grade  of  skill,  is  less 
than  fifty  cents  a  day.  If  half  the  people  of  this  country  must 
live  on  what  fifty  cents  a  day  will  buy,  the  other  half  must  live 
on  what  thirty  cents  a  day  will  buy,  since  forty  cents  is  the  meas- 
ure of  all  there  is  which  can  be  assigned  to  their  support ;  yet, 
at  this  rate,  Mr.  Wright  reports  his  conclusion  that  the  standard 
of  living  of  the  workingmen  of  Massachusetts  is  in  the  ratio  of 
1.42  to  I  in  Great  Britain.  He  does  not  treat  the  condition  of 
European  continental  laborers,  but  all  students  are  well  aware 


THE  RATE   OF    WAGES?  1 33 

that  the  British  workingman  is  better  than  his  continental  com- 
petitor in  similar  ratio. 

The  conclusion  which  can  be  drawn  from  these  data,  in  my 
own  judgment,  would  be  this  :  Great  Britain  produces  within 
its  own  limits  but  a  moderate  portion  of  the  food  of  its  people, 
and  scarcely  any  of  the  materials  used  in  its  manufactures  with 
the  exception  of  iron,  and  is  therefore  forced  to  import  by  far 
the  larger  portion  of  its  materials,  and  a  large  part  of  its  food,  and 
to  pay  the  cost  of  freight  thereon. 

The  various  elements  of  her  manufactures — in  moderate  part 
produced  at  home,  and  in  large  part  brought  from  other  countries 
— are  then  combined  into  an  annual  product  of  a  certain  value, 
out  of  which  rents,  profits,  taxes,  and  wages  must  be  derived. 
Under  present  conditions  the  remainder  over,  left  to  the  British 
workingmcn,  as  compared  to  the  Massachusetts  workingmen,  is  in 
the  ratio  of  about  two  to  three,  /.  ^.,  the  Massachusetts  working 
man  or  woman  is  fifty  per  cent,  better  off  than  the  British  working 
man  or  woman. 

Upon  the  continent,  where  the  resources  of  the  several  countries 
themselves  are  even  less  in  ratio  to  the  number  of  persons  to  be 
sustained,  the  value  of  the  annual  product  is  less  in  proportion 
than  it  is  in  Great  Britain  ;  while  the  labor  exerted  is  very  much 
greater  than  it  is  either  in  Great  Britain  or  in  in  this  country. 
Consequently  the  remainder  over,  after  paying  for  the  enormous 
cost  of  standing  armies,  and  after  being  subjected  to  the  with- 
drawal of  one  man  in  twenty  from  the  productive  work,  is  less 
^probably  by  one  half  than  it  is  in  this  country,  and  by  one  third 
than  it  is  in  Great  Britain. 

As  a  natural  consequence  large  masses  of  people  in  Italy,  in 
Germany,  and  in  some  parts  of  France  and  Belgium,  barely  exist 
upon  the  edge  of  starvation. 

It  seems  almost  a  necessity  to  bring  this  matter  down  to  the 
unit  of  the  individual,  in  order  that  the  people  dwelling  upon  the 
continent  of  North  America  may  in  some  measure  comprehend 
the  advantage  of  the  position,  and  of  their  freedom  from  vested 


134  WHAT  MAKES 

wrongs  under  which  their  fellows  are  suffering  in  countries  of  so- 
called  older  civilization. 

Another  branch  of  the  subject  to  which  I  have  as  yet  given 
little  attention,  needs  to  be  explored,  in  order  to  show  that  40 
cents  worth  is  enough  for  moderate  comfort,  if  it  is  used  with 
moderate  intelligence  ;  for  instance,  the  jail  of  the  county  in 
which  I  live  is  admirably  conducted.  The  prisoners  are  adults, 
boys  and  girls  being  sent  to  reformatories.  The  food  of  these 
prisoners  consists  of  bread  made  from  the  best  flour,  and  the 
meat  consists  of  the  remainder  of  the  carcass  of  the  best  beeves 
and  other  animals  after  the  fine  cuts  have  been  taken  off  for  the 
first  class  hotels.  These  persons  are  served  with  a  moderate 
quantity  of  tea,  with  rye  coffee,  with  such  vegetables  as  are  suit- 
able ;  in  short,  with  an  abundance  of  food,  and  it  is  probably 
better  cooked  than  in  the  average  family  of  common  laborers, 
and  yet  the  prime  cost  of  the  provisions  required  by  each  pris- 
oner, delivered  at  the  jail,  is  but  a  trifle  over  12  cents  per  day  ;  of 
course  it  is  prepared  by  prisoners. 

Now  it  appears,  both  from  Mr.  Wright's  investigations  and 
from  those  of  Dr.  Engel,  of  Berlin,  that  the  cost  of  subsistence 
of  a  workman's  family,  earning  from  $300  to  $750  a  year,  is 
sixty  per  cent,  of  his  whole  expenditure. 

If,  then,  an  abundant  supply  of  nutritious  food  for  an  adult  can 
be  procured  in  Massachusetts  at  a  cost  of  J50  a  year,  and  the 
same  economy  could  be  used  in  respect  to  other  items  of  expense, 
an  income  of  $90  a  year  to  each  person  would  suffice  for  whole- 
some conditions,  while  $100  a  year  would  amply  provide  for  the 
excess  of  rent  which  working  people  in  Massachusetts  are  obliged 
to  pay  above  their  competitors  in  England. 

This  latter  assignment  of  $100  a  year  to  each  person, — which 
was  the  average  of  20  or  30  years  ago, — would  be  a  fraction  un- 
der 28  cents  a  day.  There  can  be  little  doubt  that  the  rate  of 
wages  has  advanced  in  this  ratio,  /.  ^.,  from  28  to  40  cents  per  day 
for  each  person  during  the  last  twenty  years,  and  that  each  dollar 
has  also  greater  purchasing  power. 


THE  RATE  OF   WAGES?  I35 

If,  then,  the  margin  be  narrow  and  if  want  treads  still  close 
upon  the  steps  of  welfare — courage  may  yet  be  taken  as  to  the 
future  under  the  application  of  the  law  of  diminishing  profits  and 
increasing  wages.  , 

In  conclusion,  at  the  risk  of  repetition,  let  me  again  call  atten- 
tion to  the  fact,  that  in  order  that  each  person  of  the  present 
population  of  the  United  States,  computed  at  this  date  at  fifty- 
eight  million,  may  enjoy  five  cents  worth  per  day  more  than  the 
average  assumed  in  this  treatise,  it  would  be  necessary  that  the 
production  of  each  person  should  be  increased  $18.25  per  year  ; 
or,  in  other  words,  that  each  person  in  a  group  of  three  engaged 
in  gainful  occupation  should  produce  $55  worth  more  than  each 
one  now  produces,  and  find  a  market  for  the  increasing  product 
without  diminishing  prices. 

Now,  $18.25  per  person,  multiplied  by  fifty-eight  million,  gives 
an  aggregate  of  $1,058,500,000.  This  sum  is  twice  and  a  half  the 
value  of  the  present  wheat  crop  of  the  United  States,  ten  times 
the  value  of  the  pig-iron  produced  in  the  United  States,  about 
double  the  value  of  all  the  textile  fabrics  ;  or,  to  put  it  in  another 
way,  the  people  who  are  now  at  work,  numbering  at  the  propor- 
tion which  the  working  force  of  the  census  year  bore  to  the 
whole,  about  twenty  million,  must  add  to  the  present  product  the 
value  of  our  wheat  crop,  say  $350,000,000  ;  to  the  value -of  our 
pig-iron  product,  say  $90,000,000  ;  to  the  value  of  all  our  pro- 
duction of  textile  fabrics,  say  $650,000,000,  total,  $1,050,000,000, 
and  must  find  a  market  for  the  sale  of  the  increased  product,  in 
order  that  each  one  of  their  number  may  earn  fifteen  cents  a  day 
more  than  they  now  do,  and  that  each  one  of  a  group  of  three 
may  be  able  to  consume  more  than  they  do  now  by  what  five 
cents  a  day  more  will  buy. 

In  this  view  of  the  matter,  progress  in  material  welfare  is  and 
must  be  very  slow. 

This  problem  is  commended  to  all  who  expect  to  improve  the 
welfare  of  the  people  by  changes  in  respect  to  land  tenure,  or  by 
creating  paper  money,  or  "  fiat  money,"  or  by  compulsorily  short- 


136  WHAT  MAKES 

ening  the  hours  of  labor,  and  by  other  methods  of  meddlesome 
interference,  by  statute,  with  customs  which  have  been  gradually 
evolved  during  the  last  two  centuries. 

May  we  not  respectfully  suggest  that  such  progress  can  be  ac- 
complished only  by  the  advancement  of  science,  beginning  in  the 
common  schools,  with  manual  and  technical  instruction  as  well  as 
with  mental  work. 

Increased  production  and  a  wider  market  constitute  the  only 
sources  from  which  the  money  can  be  obtained  by  which  the  rate 
of  wages  can  be  advanced. 

On  the  other  hand,  there  must  be  this  increase  of  production,  in 
order  that  even  if  the  rate  of  wages  is  not  advanced,  each  unit  of 
the  wages  will  buy  as  much  as  it  now  does. 

The  true  function  of  commerce  must  be  fully  comprehended  in 
order  that  such  an  advance  may  be  speedily  reached.  It  cannot 
be  reached  until  the  present  fallacies  in  regard  to  wages  have 
been  given  up,  nor  until  the  principle  shall  be  accepted  that 
high  rates  of  wages,  expressed  in  terms  of  money,  are  the  result 
of  low  cost  of  labor,  expressed  in  hours  or  efforts. 

In  the  great  competition  under  which  service  for  service  is 
rendered,  those  nations  which  apply  machinery  to  the  fullest  ex- 
tent, and  to  the  most  adequate  resources,  make  the  largest  product 
at  the  least  cost  of  labor. 

In  their  exchanges  with  what  are  called  the  barbarous  or  hand- 
working  states  of  the  world,  or  with  those  nations  in  which  ma- 
chinery has  been  applied  to  the  arts  in  least  measure,  they  gain  the 
most  for  themselves,  while  rendering  the  greatest  service  to  those 
with  whom  they  deal. 

This  is  the  secret  of  English  wealth. 

This  is  the  secret  of  the  higher  wages  of  the  English-speaking 
people. 

This  is  the  secret  which  the  people  of  the  United  States  have 
yet  but  half  comprehended,  because  the  abundance  of  their  pro- 
duct is  so  great,  that  no  stress  of  want  has  yet  compelled  atten- 
tion to  be  given  to  the  science  of  political  economy,  and  to  the 


THE  RATE  OF    WAGES?  1 37 

methods  by  which  the  burdens  of  taxation  can  be  most  easily 
borne. 

This  subject  is  a  vast  one  ;  it  includes  not  only  the  tariff  ques- 
tion, but  also  the  much  more  complex  and  difficult  question  of 
local  or  municipal  taxation,  in  respect  to  which  there  is  no  uni- 
form system  or  practice  in  the  United  States. 

If  I  have  succeeded  in  calling  attention  to  the  fundamental 
principles  which  must  be  considered  before  we  can  even  begin  to 
deal  intelligently  with  these  vast  social  questions,  I  shall  have 
accomplished  my  purpose. 

It  will  have  been  apparent  to  the  reader  that  in  this  treatise 
and  its  appendices,  two  separate  lines  of  investigation  have  been 
followed. 

In  the  first  place  the  principle  has  been  laid  down  that  by  way 
of,  or  by  force  of,  competition,  there  is  a  tendency  in  the  rate  of 
profit,  interest,  rent,  or  by  whatever  name  or  designation  the  share 
of  the  capitalist  is  defined,  to  diminish. 

On  the  other  hand,  there  is  a  tendency  in  the  rate  and  pur. 
chasing  power  of  wages  to  increase. 

These  tendencies  are  subject  to  variation  in  short  periods  of 
time,  owing  to  short  crops,  war,  or  other  similar  causes,  but  in  any 
long  period  of  time  they  become  rules. 

Furthermore,  in  any  country  inhabited  by  a  substantially  homo- 
geneous people,  high  wages  both  in  rate  and  in  purchasing  power 
are  the  necessary  consequence  or  result  of  the  low  labor  cost  of 
production. 

This  rule  will  also  apply  between  different  countries  subject  to 
variation  arising  in  the  practice  of  hereditary  arts,  or  from  the 
imposition  of  customs  duties  and  other  like  causes. 

This  rule  is  also  subject  to  temporary  variation — but  in  a  long 
period  of  time  may  be  considered  absolute  in  its  working.  These 
positions  have  been  sustained  historically  and  by  the  citation  of 
facts  growing  out  of  existing  conditions  in  the  United  States,  and 
they  form  the  main  purpose  of  the  treatise. 

The  second  subject — or  division  of  the  main  subject  as  it  might 


138  THE  RATE   OF   WAGES. 

perhaps  better  be  called — consists  in  the  attempt  to  measure  the 
annual  product  of  the  United  States  in  terms  of  money,  and 
thereby  to  determine  the  possible  share  or  remainder  enuring  to 
those  who  do  the  work,  by  which  measure  the  average  rate  of 
wages  in  the  United  States  at  a  given  time  or  at  the  present  time 
may  be  established. 

This  part  of  the  subject  is  sustained  by  such  testimony  as  may 
be  available  from  official  documents,  but  must  be  considered  as 
only  approximate  in  its  terms  ;  suggesting  a  method  whereby  these 
facts  may  be  hereafter  determined  rather  than  a  conclusive  trea- 
tise upon  present  conditions  which  it  would  be  impossible  for  a 
private  person  to  work  out  in  an  absolutely  certain  manner. 

It  may  be  readily  conceived  that  the  Government  Bureau  of 
Statistics,  or  the  officers  of  the  next  census  could  make  a  very 
accurate  computation  of  value  of  our  annual  product  by  first 
ascertaining  the  value  of  grain,  cotton,  metals,  timber,  wool,  and 
other  fibres  and  the  like,  and  then  tracing  each  subject  through 
its  various  conversions  to  the  point  of  ultimate  consumption,  as 
bread,  clothing,  shelter,  machinery,  etc.,  etc. — the  value  of  that 
portion  exported  being  very  easily  computed  separately. 

Of  course  there  would  be  some  errors  and  omissions,  but  they 
•would  balance  each  other,  and  the  result  in  cents  per  day  per 
person,  or  dollars  per  year  per  family,  would  be  but  little  affected 
by  the  sum  of  all  probable  errors. 


APPENDIX    V. 


My  attention  having  been  called  to  a  computation  of  the  value 
of  the  annual  product  of  the  census  year,  which  is  included  in 
the  report  of  Mr.  Joseph  Nimmo,  Jr.,  Chief  of  the  Bureau  of 
Statistics,  for  1884,  I  have  requested  him  to  give  me  the  data 
upon  which  he  reached  his  conclusions  in  the  matter,  and  I  have 
the  satisfaction  of  submitting  his  letter  herewith. 

Bureau  of  Statistics, 
Washington,  D.  C,  October  21,  1884. 

Dear  Sir  : — Your  letter  of  the  17th  inst.  has  been  received, 
and  I  will  reply  as  follows  in  regard  to  the  total  value  of  our 
annual  product  : 

The  estimate  of  $3,600,000,000  for  the  product  of  agriculture 
was  given  to  me  by  Mr.  J.  R.  Dodge,  a  year  ago,  as  the  result  of 
a  series  of  careful  investigations,  and  he  firmly  adheres  to  that 
estimate.  Mr.  Dodge  had  charge  of  the  census  agricultural 
statistics,  and  I  regard  him  as  the  best  authority  in  the  United 
States  upon  that  subject. 

The  following  is  a  foot-note  upon  this  subject,  which  appears 
in  my  article  on  "  American  Manufactures,"  contributed  to  the 
North  American  Review^  of  June,  1883,  and  is  taken  from  a  mem- 
orandum upon  the  subject  given  to  me  by  Mr.  Dodge  : 

"  This  is  an  estimate  made  by  Mr.  J.  R.  Dodge,  Statistician  of 
the  Department  of  Agriculture,  and  Special  Agent  of  the  Census 
for  the  Collection  of  Statistics  in  regard  to  Agriculture.  The 
census  gives  $2,213,402,564  as  the  estimated  value  of  farm  pro- 
ductions. This,  however,  does  not  include  the  increased  value 
of  live  stock,  nor  the  value  of  the  products  of  pasturage  on  the 

130 


I40  WHAT  MAKES 

public  lands.     It  also  omits  to  a  very  large  extent  products  of 
horticulture." 

All  the  other  values,  in  making  up  the  aggregate,  are  directly 
from  the  Census  Office  ;  so  that  my  total  of  $9,817,900,652  in  the 
foot-note  on  page  40  of  my  annual  report  was  made  up  as  follows  : 

Agriculture $3,600,000,000 

Manufactures 5,369,579,191 

Illuminating  gas  (partly  estimated) 30.000,000 

Mining 236.275,408 

Forestry  (partly  estimated) 455.000.000 

Fisheries 43,046.053 

Meat  production  and  wool  clip  of  ranches  (estimated)           .  40,000.000 

Petroleum — manufactured  product       .....  44.000,000 

Total  (materials  out) $9,817,900,652 

I  conferred  very  fully  with  the  Acting  Superintendent  of  the 
Census,  Mr.  Geo.  W.  Richards,  an  exceedingly  intelligent  and 
able  man,  who  appears  to  have  a  thorough  understanding  of  the 
whole  census  figures.  Regarding  the  total  value  of  the  products 
of  manufacture,  he  stated  to  me  that  while  there  are  some  dupli- 
cations in  it,  the  omissions  amount  to  very  much  more.  It  is 
certain  that  the  values  are,  on  the  average,  below  the  actual 
values  ;  and  that  there  is  a  considerable  amount  overlooked  ; 
besides,  the  census  did  not  take  into  account  the  products  of  any 
establishment  the  value  of  which  products  was  less  than  $500.00. 

I  have  no  doubt  that  the  total  value  of  the  products  of  all 
industries  was  over  rather  than  under  $10,000,000,000,  perhaps 
in  very  considerable  measure,  but  of  course  there  are  no  exact 
data  beyond  those  given  in  the  census.  We  may  safely  say  on 
the  basis  of  the  census  data  that  the  total  value  of  the  products 
of  all  industries  in  the  United  States  was  at  least  ten  thousand 
million  dollars. 

I  am,  sir, 

Very  respectfully  yours, 

Jos.  NiMMO,  Jr., 

Chief  of  Bureau. 


THE  RATE   OF   WAGES?  141 

This  computation,  it  will  be  seen,  is  almost  identical  with  my 
own,  except  that  Mr.  Nimmo  uses  the  expression  "at  least," 
where  I  have  said  that  the  annual  product  in  the  census  year  was 
"  at  most,"  $10,000,000,000.* 

*  It  is,  of  course,  impossible  to  bring  such  a  problem  as  this  to  very  exact 
terms  by  an  unofficial  investigation  ;  but  if.  however,  we  assume  an  error  of  five 
per  cent,  in  the  computation  of  the  gross  value  of  the  annual  product,  such  an 
addition  would  be  substantially  two  and  a  half  cents  a  day  to  each  person,  and 
would  amount  to  the  gross  sum  of  $500,000,000  a  year  on  the  average  popula- 
tion of  the  last  four  years. 

Such  an  addition  would  fully  cover  the  point  in  respect  to  which  there  are  n^ 
actual  data  in  the  census  or  elsewhere,  but  which  must  be  treated  wholly  as  i 
matter  of  observation  and  judgment,  to  wit :  the  steadily  increasing  proportiotf 
of  prosperous  persons  who  may  be  economically  called  the  well-to-do,  or  in 
common  speech  the  forehanded  men  ;  such  as  prosperous  shopkeepers,  able  fore- 
men in  the  mechanic  arts,  farmers  whose  principal  tools  are  their  own  brains, 
capable  women  taking  part  in  occupations  formerly  controlled  wholly  by  men, 
small  manufacturers  who  own  and  control  their  own  works, — and  the  like.  In 
the  sorting  which  I  have  previously  made  on  a  broad  and  general  scale,  I  have, 
perhaps,  left  no  place  for  this  class  of  persons,  but  by  adding  five  per  cent,  to 
the  assumed  product  of  $10,000,000,000  in  the  census  year  full  provision  would 
be  made  for  them  in  the  following  classification  : 

Total  production  as  first  computed $10,000,000,000 

Domestic  consumption  on  farms  and  domestic  product  of 
families  which  is  not  exchanged  or  does  not  come  into 
the  commercial  product i, 000,000.000 


Commercial  product $9,000,000,000 

Share  of  capitalists,  5  per  cent.     .         .         .  $450,000,000 

Savings  of  the  people,  5  per  cent.  .         .  450,000,000 

Addition  to  the  capital  or  wealth  of  the  nation        .         .         .  900,000,000 

Wages  Fund  .........      $S,  100.000,000 


Share  of  r,  100,000  persons  who  are  assumed  to  be  engaged  in 
mental  and  administrative  work,  computed  at  $i.ooo  each, 
including  227,210  teachers  and  scientific  persons.  This 
class  may  be  subdivided  as  follows  : 

200,000  teachers  in  the  lower-grade  schools,  scientists,  authors, 
artists,  young  lawyers  and  clergymen,  or  other  persons 


THK 

■gHIVERSITTi 


14^  IVHA  T  MAKES 

Attention  may  be  called  to  the  proof  which  is  to  be  found  in 
Mr.  Nimmo's  excellent  annual  report  of  the  actual  and  necessary 
preponderance  of  domestic  as  compared  to  foreign  commerce. 

It  will  be  very  apparent  to  any  one  who  considers  the  statistics 

of  these  classes  at  $550 — $1 10,000,000.     900.000  mer- 
chants, tradesmen,  officials  or  others  in  the  higher  work 
of  administration  at  $1,100  each — $990,000,000       .         .      $1,100,000,000 
16,200,000  farmers,  laborers,  mechanics,  artizans,  operators, 

clerks,  dress-makers,  and  other  wage-earners,  $432  each  7,000,000,000 


$8,100,000,000 


Total  assumed  product  thus  accounted  for  as  above  .  $10,000,000,000 
Add  5  per  cent  upon  this  gross  product  in  order  to  account 
for  the  larger  consumption  of  well-to-do  farmers,  fore- 
men, prosperous  country  tradesmen  or  shopkeepers,  and 
other  classes,  of  whom  there  may  be  one  million,  and  to 
each  of  whom  $500  each  above  the  average  might  be 
assigned.  Such  an  assignment  would  give  five  per  cent, 
of  the  farmers,  or  200,000,  a  cash  income  of  $932  each,  in 
place  of  an  average  of  $432,  and  would  bring  800,000  of 
those  who  have  been  classed  as  tradesmen,  mechanics, 
operatives,  clerks,  etc.,  from  $432  up  to  $932  each  .  $500,000,000 

Total $10,500,000,000 


If  any  larger  product  should  be  assumed  it  would  be  difficult  to  trace  it  either 
in  the  form  of  greater  savings  or  in  larger  consumption.  No  evidence  can  be 
found  of  any  larger  addition  to  capital  than  has  been  given,  and  no  trace  of 
higher  wages  so  far  as  the  census  returns  cover  rates  of  wages  ;  but  the  incomes 
of  what  may  be  called  the  prosperous  middle  class,  to  whose  consumption  the 
possible  additional  product  has  been  assigned,  are  not  to  be  found  in  any 
statistical  returns. 

If  such  an  addition  ought  to  be  made,  then  the  average  product  of  each 
person  in  the  census  year  was  57^  cents  per  day,  and  the  addition  of  2\  cents  to 
each  person  per  day  is  to  be  added  to  the  previous  computation  of  55  cents. 

This  reasoning  is  based  upon  the  position  taken  in  this  whole  treatise,  to  wit : 
that  the  progress  of  the  few  is  not  at  the  cost  of  the  poverty  of  the  many  ;  but, 
on  the  contrary,  the  ever  increasing  abundance  which  has  been  produced  or 
brought  forth  to  the  use  of  men  in  recent  years,  may  be  shared  by  all  classes 
according  to  the  relative  capacity,  integrity,  and  industry  of    the  respective 


THE  RATE   OF   WAGES?  I43 

of  domestic  agriculture  and  manufactures,  that  only  a  very  small 
portion  of  the  products  of  agriculture  could  be  imported  from 
any  other  country — mainly  consisting  of  sugar,  rice,  a  portion  of 
our  necessary  supply  of  wool,  and  a  very  few  other  articles, — 
while  of  necessity  a  very  considerable  portion  of  agricultural 
products  are  raised  within  each  State  itself.  It  is  also  true  that 
by  far  the  greatest  proportion  of  the  mechanical  and  manufactur- 
ing arts  exist  from  necessity  and  not  from  choice,  within  the  limits 
of  particular  sections  of  the  country  and  even  in  particular  States. 
Reference  has  been  made  in  the  body  of  the  treatise  to  the 
way  in  which  special  arts  have  become  rooted  or  centralized  in 
particular  places,  sometimes  without  any  apparent  reason,  except 
that  groups  of  population  have  become  habituated  to  the  prac- 
tice of  such  arts,  so  that  they  have  become  hereditary.  Under 
such  conditions  the  law  of  decreasing  relative  profits  and  in- 
creasing relative  wages  can  be  observed  in  the  clearest  manner, 
as  well  as  the  rule  of  high  rates  of  wages  accompanying  or  re- 
sulting from  low  labor  cost  of  production,  because  in  such  places 
all  the  subsidiary  employments  have  gathered  around  the  chief 
centre,  and  every  possible  facility  exists  for  making  the  largest 
product  by  means  of  the  work  of  the  least  number  of  persons. 

The  interdependence  of  agriculture  and  of  the  manufacturing 
and  mechanical  arts,  and  the  necessary  proportion  of  each  in 
every  prosperous  State,  are  proved  in  a  very  skilful  manner,  by 
Mr.  J.  R.  Dodge,  the  able  Statistician  of  the  Department  of  Agri- 
culture of  the  United  States,  by  means  of  a  series  of  diagrams 
contained  in  the  Agricultural  Report  for  1883,  showing  the  man- 
ner in  which  the  values  of  farms  and  farm  products  are  influ- 
enced by  the  establishment  of  various  branches  of  the  mechanic 
arts  and  of  the  lesser  manufactures  in  their  immediate  proximity. 

members  of  each  class ;  provided  the  functions  of  the  legislators  are  limited  to 
such  acts  as  may  leave  the  principle  of  competition  in  the  use  of  land  and  of 
all  its  products  as  free  to  work  out  its  just  results  as  the  protection  of  the  young, 
the  ignorant,  or  the  incapable  from  injustice  will  permit. 

In  other  words  compelition  leads  of  necessity  to  the  most  effective  and  bene- 
ficient  system  of  co-operation  among  men. 


144 


WHA  T  MAKES 


00 


^     to 

fa      {/3 

in    1^ 


h    w 

<  fa 
D  o 
O" 

fa 

a 


'I-  C<^  O  O    M    M    N 

en  -t-  M  vC  c^  TOO 

CO  co'  c>  a  n  c>  r-^ 

^  O  CI  O^  o  •-■  o 

CO    Oco    O  en  O  O 

-f  O  vO   T  O*  t^vO 
O  en  rj"  i-i  w 


O^ 

en 

o 

CO 

en 

r* 

CO* 

en 

o 

"? 

u-1 

vO 

o 

en 

o 

en 

•^ 

•^ 

T  N    M    O    tMh 

r^  i-i  Ti"  ir>  in  en 

T  -r  o  w  «  « 

CO  o'  >r)  i-T  vO*  "-"^ 
-t  M  CO  vO  r^  r^ 
CO  o  en  r^co  en 

CO 


\r\  in 

i-i   O  r>. 
N  O  O 


0»  mO   ino    CT>0 
en  O^  en  l^O   m  O 


\0  t^  O^  in  in  r>.  en 
i^  en  O  O  O  N  l^ 
O   M    O^  \rt  ■rt  fr^  f^ 

M  enco*  r-^  r^  rC  i-T 
Oco  in  en  o  ►-•  en 
m  -tco  CO   ooo  M 

T  <>  r^  C>  en  i-T  o 
in  in  o  <-i  Tj-  1-1  M 
r*  T  rt  w 


O^  en  r» 
en  o  M 
mvo  O 

co'oo"  o" 
in  r>>  o^ 
Tj-  en  m 


CO  invO  CO  Tt  rJ-vC 
r>i  -1-  G^  M  T  lO  T 
CO  in  r^  r^  N  vO  CO 

O*  in  o'  N  T  M  o' 
CO  eno  r^  o  O^  "^ 
vO  O   i-i    C^  I"^  M    in 


l_, 

QO 

CO 

vO 

o 

i-i 

c 

r^ 

CO 

o 

-t 

N 

vO 

in 

in 

*^ 

t^  O  enco  u)  O 
Tj-  H-i  m  O^co  rt 
in  O  ^  Tco   tT 

(>co*  N  cr*  M*  c> 
m  en  en  in  OO 
T  CO  O  t->  O  r~« 
rfvo'  O'vC    <> 


in 

vO    C^^O 
M    O    O 


^ 


O  T  m  o  CO  CO  N 
T  e^  CO  CO  o^  w  en 
t>.  O^  iH  enco  CO  O 
cT  T  en  <-'  in  i-T  rC 
O  O  T  O  N  r^\0 
r>.  M  o  M  oo  in  '-' 


CO   O    O 


^ 


l/i 


CA 


s  -   ::2 

O         cd 

a,      bA 


OJ    y 


<«   h   r.   w 
S   =  ^   ""^ 


^  p. 

d     . 

C   S    <«   a,  ^  -?|    4) 


.-a 

•   O 


u 
.    .    .  s    . 

.   .   .2 
w  ««  '-  y 

w  u  c  5  3 
o  ii  iuT  o 

cS  2  "  ,^  fv 


THE  RA  TE  OF  WAGES 


145 


O  CO  o  r-sco  o 
00  00  rf  00  1-  O 
r^co  O  IT)  O   10 

00'  -f  O  o'  vO  en 
O^  ir>  O  CO  00 
O  x^co  CO  r^vO 

vo   ^  U-)  d^  m"  m 


M,  0   0  r^ 

00 

m 

M    0^  0  CO 

M   00     0     CO 

ON 

M 

CO 

a 

VO     0     IT)    M 

CO 

CO 

CO  0  0   0 

N 

0   CO  0   cn 

^ 

t^ 

M  r^  i-< 

0 

CO 

r^vO 

rf 

CO 

N 

CO 

0  N    CJ 

CO 

Q  r^ 

CO    u^  CT> 

CO 

0  r^ 

vO   inco 

0  CO 

coo   t^ 

00 

0  -^ 

0  vO 

vO   r^  CO 

r^ 

0    0  VO 

^ 

0    CO 

00    M    W 

CJ 

c^ 

M 

c^ 

CO 

000  O  in 
O  w  O  c^ 


N  i-i  CO  M  CO  CO 
r^O  r^  O  '^  O 
CO   O  c<   c^   O  c^ 

co'o*  CO  Tt  o"  CO 
r^  r^  r^  •^  O^  •^ 
M  10  10  rj-  r^  i^ 


in  in  pj  t}- 

M  r^  O  m 


M    CO  o 


O  in  C>  r->.  M  i-i 
t^  N   O^  CO  r^  1^ 

■<^  Ti-  >-r  r^  o  N 

CO  -^  C>  rf  00"  CO 

CO  •-  CO  N  r^  r^ 
vO  CO  ^  O  NO 
c>  -^  -^  m'  M*  rf 


in  0   0    0 

rt 

CO 

c^    0   t^  N 

N 

x^ 

0000 

CO 

Tj- 

vd"  d   CO  rf 

Tj- 

d 

HH      0     "^    ■^ 

M 

in  in  i-i    c> 

M 

t^ 

M     0>  ■^■ 

0 

t-i 

Tl- 

c^ 

C^ 

c< 

t^o  0 

CO 

M   VO 

0   m  Tt 

vO 

M    CO 

CO  0   C> 

CO 

vO  CO 

vO    0    0 

r^ 

COO      1 

0  0  00 

^ 

-      ON 

in  c<  r^ 

CO    CO 

W      T^ 

0 

g^^ 


CO 


M  ino  CO  ON  r>i 
»  O  ON  p<  CO  in 
00    ON  ■-   in  CO 

d^  d^  CO  On  r^o" 

CO  M  O    ■<1-  0^0 

N   1-1    c?  t-^  in  CO 


On  O    CO  in 
O   O    ON  Tt 

CO   O^    T}-   hH 

m'  6  -^  6 

t^  Q   t^  (^ 
CO  O         t^ 


t-»  O  00 
O  rfoo 
CO    O    M 


c« 

r^ 

rtCC 

M 

r^ 

r^  c^ 

Cl 

N 

0 

CO 

O    rJ-O 


W 


'a  t>  c           -o 

rt  -  0  -    -     c 

-=    0    cj               0 

Sj&M             CU 

i 

*J 

a 

•     •   w   &•    •     • 

£ 

^-  K  2  a. 

^.    d    t£    5^3      • 

13  M  rtcA)  2 

^c^^gc^- 

^    (U  "^     3     1,    >s 

g     Cj     §     ^     C3     0 

uSucAiSffi 

'O  c  -a 

c  ^  o  c 

3  -  ■"  s 

o  •  o 

Oh  p. 


c 

o 
a, 


CO 

,2  ^ 


C/3 


U^ffi 


rt    2    O 


146  WHAT  MAKES 

By  the  courtesy  of  Mr.  Dodge,  I  am  enabled  to  give  his  cor- 
rected estimate  of  the  value  of  farm  products  for  the  year 
covered  by  the  census  returns.  It  will  be  observed  that  his  esti- 
mate somewhat  exceeds  my  own,  even  though  he  does  not  in- 
clude the  domestic  farm  consumption  of  fruit  and  vegetables, 
but  inasmuch  as  a  very  considerable  part  of  the  hay  and  corn' 
crops  are  converted  into  meat  and  dairy  products,  a  fair  allow- 
ance for  this  duplication  would  bring  the  two  estimates  almost  to 
an  exact  agreement. 

The  great  increase  both  in  quantities  and  in  values  between  the 
years  1859  and  1879  will  be  observed,  but  although  the  farm  value 
was  greater  for  the  same  quantities  in  1879  than  in  1859  it  by  no 
means  follows  that  consumers  at  a  distance  paid  more  for  grain 
or  dairy  products  ;  the  advance  in  prices  at  the  places  of  produc- 
tion, so  far  as  it  can  be  traced,  is  less  than  the  reduction  which 
was  made  between  those  two  dates  in  the  charges  for  moving 
those  products  by  railway  from  producer  to  consumer.  The  ex- 
tension of  the  railways  to  new  lands  first  made  production  and 
sale  possible  ;  then  as  production  increased  the  reduction  in  the 
railway  charge  occurred,  so  that  it  has  not  been  until  the  present 
year,  1884,  that  any  material  reduction  of  price  has  been  felt  by 
farmers,  and  even  in  this  year  this  reduction  has  only  occurred  in 
any  great  measure  with  respect  to  wheat  and  wool.  (See  next 
essay  on  the  Railway,  the  Farmer,  and  the  Public.) 

But  this  increase  of  the  products  of  agriculture  has  been  ac- 
companied by  an  extension  of  manufacturing  and  the  mechanic 
arts. 

It  is,  of  course,  impossible  that  any  community  can  long  exist 
which  is  exclusively  devoted  to  agriculture,  except  under  a  system 
of  slavery.  The  artisan  must  accompany  the  farmer  almost 
from  the  beginning  of  the  settlement  of  any  section  ;  next,  or 
almost  at  the  same  time,  comes  the  minister,  lawyer,  doctor,  shop- 
keeper, domestic  servant,  and  laborer  ;  soon  after,  or  in  the  later 
years,  even  before  the  farmer,  comes  the  railway  with  its  em- 
ployes, and  presently  the  factory  of  some  kind,  each  following  a 


THE  RATE   OF    WAGES?  1 47 

natural  order  and  sequence,  except  when  interfered  with  by 
restrictive  statutes  limiting  the  freedom  of  labor  as  in  the  days  of 
slavery,  or  indirectly  preventing  commerce  between  the  States. 

The  most  perfect  example  of  the  working  of  this  law  is 
to  be  found  in  the  rapid  growth  of  various  branches  of  manu- 
facturing industry  in  the  Southern  States  since  the  statutes  impos- 
ing slavery  upon  that  section  were  removed.  Here  was  a  section 
almost  wholly  agricultural :  its  people  were  dependent  upon  the 
North  even  for  pots  and  pans  ;  for  clumsy  "  nigger  "  hoes  and 
other  rude  and  heavy  implements  of  agriculture,  fit  only  for 
slaves  to  use  ;  for  wagons  ;  for  all  their  iron  ;  and  also  even  for 
hay,  corn,  and  bacon.  Yet  the  moment  the  burthen  of  slavery 
was  removed,  all  the  arts  sprang  into  existence, — some  of  them, 
perhaps,  prematurely.  In  many  branches  of  industry  the  tide 
of  commerce  is  reversed :  the  largest  single  tannery  in  the 
country  gets  itself  established  in  Tennessee,  and  sends  its  leather 
to  New  York ;  Alabama  discovers  the  imperial  deposit  of  iron 
and  coal  of  the  world  among  her  pine  woods,  and  sends  her 
product  to  New  England  ;  the  mountain  section  sends  its  hard 
woods  in  various  half-manufactured  forms  all  over  the  North  and 
West ;  and  in  every  direction  the  interdependence  of  agriculture, 
manufacturing,  and  commerce,  asserts  itself  as  the  natural  out- 
come of  lih-^rty. 

But  in  the  so-called  farming  States  of  the  West,  the  necessary 
and  almost  simultaneous  growth  of  all  the  arts  of  life  is  most  ap- 
parent. As  an  example  of  the  evolution  of  industrial  society,  no 
better  example  can  be  taken  than  the  State  of  Ohio,  lying  mid- 
way between  East  and  West.  Within  a  generation  Ohio  was  rated 
as  almost  exclusively  devoted  to  agriculture.  Even  as  late  as 
1869  nearly  one  half  of  the  small  traffic  on  her  railways  was 
merely  through  traffic,  in  which  the  State  itself  had  little  interest. 
In  1883  a  vast  change  had  occurred  which  may  be  pictured  as 
follows  : 

Ohio  lies  midway  between  East  and  West.  In  1883  it  contained 
6,897  miles  of  railroad,  against  3,324  in  1869.    In  1869,  the  actual 


148  WHAT  MAKES 

tons  moved  over  all  the  railways  reporting  in  the  State  numbered 
14,559,704,  of  which  fifty-five  per  cent,  represented  local  traffic 
and  forty-five  percent,  through  traffic.  In  1883,  63,683,643  tons 
were  moved,  of  which  66\  per  cent,  represented  local  traffic  and 
O'^ly  33|  per  cent,  through  traffic,  showing  how  the  local  trafft( 
gains,  both  absolutely  and  relatively.  The  charge  per  ton  pe? 
mile  in  1869  ^^as  2.446  cents  ;  in  1883,  only  .875  cents  per  ton 
per  mile.  Graphically  the  Ohio  Railroad  traffic  may  be  repre- 
sented in  this  way  : 

1869  TONS   MOVED. 


I4'559.704 
Local 

Through 
1883 

63,683,643 
Local 

Through 


CHARGE   PER   TON    PER    MILE. 


1869         2,446 
1883  .875 


"  The  actual  freight  charge  on  all  the  railroads  reporting  in 
Ohio  in  1883  was,  in  round  figures,  $67,000,000.  Had  this  traffic 
been  subjected  to  the  charge  of  1869  the  sum  would  have  been 
$201,800,000. 

"  The  difference  between  these  two  sums  is,  in  currency,  $134- 
800,000  ;  in  gold,  $89,400,000.  Now  since  two  thirds  of  this 
traffic  was  local  traffic,  the  saving  in  rates  to  the  people  of  Ohio 
since  1869,  on  their  local  traffic  only,  was,  in  currency,  $90,000- 
000  ;  in  gold,  $60,000,000." — From  "The  Railway,  the  Farmer, 
and  the  Public,"  reprinted  herewith. 

The  saving  which  ensued  in  a  single  year  growing  out  of  the 
application  of  capital  to  railways,  therefore,  either  added  sixty 
million  dollars  to  profits  and  wages  or  else  it  saved  as  much  labor 
as  would  be  represented  by  that  sum  in  the  work  of  subsisting, 
clothing,  and  sheltering  the  people  of  the  State. 

Now  what  have  been  the  forces  that  have  worked  this  great 
change  ?     What  caused  the  railways  to  be  built,  and  what  new 


THE   RATE    OF    WAGES?  1 49 

conditions  have  the  railways  brought  into  existence  ?  How  do 
these  new  conditions  themselves  react  in  sustaining  the  railways 
by  giving  them  this  extraordinary  increase  in  local  traffic  ? 

In  order  to  understand  this  matter  fully  it  would  only  be 
necessary  for  an  acute  observer  to  compare  the  relative  condi- 
tions of  the  people  of  Ohio  with  an  equal  number  who  now  exist 
in  Eastern  Kentucky  and  Tennessee  and  in  Western  North  and 
South  Carolina  under  conditions  similar  to  those  of  a  century  ago 
in  other  parts  of  the  country. 

But  in  the  absence  of  such  actual  observations  we  must  again 
resort  to  statistics  which  prove  the  beneficent  law  of  interdepen- 
dence as  compared  to  the  independence  and  isolation  of  the 
mountaineers. 

For  this  purpose  the  four  principal  subdivisions  of  the  census 
should  be  increased  to  seven. 

Table  of  all  persons  occupied  in  gainful  occupations  by  the 
census  of  1880  : 

Class  I. — Persons  engaged  in  agriciilture,  including  farm  laborers  .        7,670,493 

Class  2. — Professional  and  personal  service,  omitting  laborers  not 

specified         ...  .......       2,215,015 

Class  3. — Trade  and  transportation       ......        1,810,256 

'Class  4. — Pursuits  which  are  mechanical  rather  than  manufacturing, 

according  to  common  custom  in  classifying  them     .         .         .       2,397,112 

Class  5. — Pursuits  which  are  of  the  nature  of  manufacturing  rather 
than  mechanical,  according  to  common  custom  in  classifying 
them,  by  estimate  .........        1,200,000 

Class  6. — Mining  and  pursuits  immediately  connected  therewith, 

separated  by  estimate     ........  ^40,000 

15,532,876 

Class  7. — Laborers  not  specified,  who  are  doubtless  distributed  in 
the  service  of  the  various  arts  or  occupations  included  in  the 
last  five  classes — agricultural  laborers  having  been  separately 
enumerated — but  doubtless  many  laborers  pass  from  one  to 
another  class  as  occasion  may  require      .....        1,859,223 


[7,392,099 


'  Judgments  will  vary  in  making  this  subdivision.  I  have  classified  machin- 
ists, for  instance,  numbering  101,130,  as  being  in  the  factory  division,  and  I 
have  placed  milliners,  dress-makers,  and  sempstresses,  285,401,  as  well  as 
tailors  and  tailoresses,   133,756,  on  the  mechanical  side,  although  much  of  the 


I50  WHAT  MAKES 

Perhaps  we  may  account  more  fully  for  the  progress  of  Ohio  by 
considering  the  ratio  which  each  class  of  occupations  of  the 
people  now  bears  to  the  other  in  that  State. 

For  this  purpose  we  may  sort  them  according  to  the  census  of 
1880.  The  population  in  that  year  numbered  3,198,062,  of 
whom  994,475  were  engaged  in  some  kind  of  gainful  occupation, 
comprising  i  in  3.22  as  follows  : 

Agriculture  ...........  397.495 

Professional  and  personal  service 250,371 

Trade  and  transportation       .         .         .         .         .         .         .         .  104,315 

Manufacturing,  mechanical,  and  mining        .....  242,294 

994.475 

The  principal  subdivisons  of  the  latter  class  will  be  found  in 

*  the  following  lists,  and  it  will  be  observed  that  by  far  the  larger 

part  of  these  arts  exist  in  Ohio  in  the  nature  of  things  ;  they  have 

grown  out  of  the  rxecessary  diversity  of  occupations  which  has 

ensued  from  the  application  of  science  and  invention  to  all  the 

arts  of  life. 

Tailors,  dress-makers,  and  seamstresses 33,212 

Carpenters  and  joiners     .........         29,770 

Blacksmiths      ...........          14,623 

work  of  making  clothing  is  now  done  in  workshops  which  might  well  be  des- 
ignated as  factories.     These  latter  classes  differ  however  from  textile  factories 
in  this  respect :  that  workshops  for  the  manufacture  of  clothing  by  women  are 
apt  to  be  established  at  centres  where  large  numbers  of  men  are  congregated 
who  are  engaged  in  other  work,  as  in  Chicago  and  other  Western  cities  in  recent 
years. 

If  all  those  whose  occupations  tend  to  concentration  in  factories  were  classed 
as  manufacturing  operatives,  including  clothing  factories,  hat  factories,  metal- 
goods  factories,  textile  factories,  and  the  like,  the  proportion  classed  as  manu- 
facturing would  probably  be  about  even  as  compared  to  those  engaged  in  the 
mechanic  arts — i.  e. ,  in  round  figures  : 

Manufacturing  ........     1,800,000 

Mechanical        .........     1,800,000 

Laborers  taken  over  from  personal  service  as  auxiliaries  in 

these  arts,  say 400,000 

Total 4,000,000 


rHE  RATE   OF    WAGES?  151 

Iron-  and  steel- workers 1 3.4 19 

Painters  and  varnishers 11,458 

Boot-  and  shoe-makers 10,964 

Brick  and  stone  masons  and  stone-cutters  .         ,         .         .         .  10,713 

Machinists        ...........  7i49S 

Carriage,  car,  and  wagon  makers 7,020 

Engineers  and  firemen 5. 860 

Butchers  .         .         .         .^        .         .         .         .         .         .         .  5,7i3 

Cabinet-makers  and  upholsterers 5.^15 

Miners     ............  5.575 

Coopers  ...........*  5-357 

Cigar  makers  and  tobacco  workers 5.297 

Printers 4.658 

Saw-mill  operatives 4. 14S 

Millers 3.9^9 

Manufacturers  and  Officials' Manufacturing  Cos       .         .         .         .  3,8 n 

Harness,  saddles,  and  trunks    ........  3. 661 

Apprentices      ...........  3,525 

Brick  and  tile  makers       .........  3,355 

Tinners 3-331 

Bakers 2,983 

Cotton,  wool,  and  silk      .........  1, 818 

Brewers  and  malsters       .........  1.744 

Gold,  silver,  and  jewelry  .         i         .....         .  1,260 

Wheelwrights 1,028 

"oy  ..^-.:,    Of-.^  211,335 

Unenumerated,  or  less  than  1,000  each    ......         30, 959 

242,294 

It  needs  but  a  glance  over  the  titles  of  these  manufacturing  and 
mechanical  occupations  to  see  that,  given  a  considerable  area  of 
fertile  land  and  an  intelligent  and  free  system  of  agriculture, 
nearly  all  the  other  occupations  in  this  list  must  of  necessity  fol- 
low or  accompany  agricultural  development  ;  while  most  of  these 
occupations,  especially  those  of  mechanical  industry,  must  not 
only  exist  within  the  State  itself,  but  must  concentrate  in  and 
around  every  populous  centre  of  the  State,  because  the  work  is 
of  such  a  kind  that  it  cannot  be  imported  from  any  other  place 
except  at  a  greater  cost. 

Towns  and  cities  grow — they  are  not  made, — and  few  men  can 
even  foresee  by  a  few  years  where  they  must  exist ;  but  where 
they  have  grown  they  serve  the  agricultural  population  around 
them  and  are  served  by  them.     Out  of  this  exchange  comes  in- 


152  WHAT  MAKES 

creased  welfare,  and  both  city  lots  and  country  farms  increase  in 
value  as  the  result  of  the  facility  which  is  given  by  their  prox- 
imity for  attaining  the  best  conditions  of  life  with  the  least  effort, 
/.  e.^  a  less  quantity  of  labor  and  a  greater  quantity  of  products 
resulting  in  lower  cost  of  production  and  higher  rates  of  wages. 
The  diagrams  given  by  Mr.  Dodge  furnish  a  very  interesting 
proof  of  this  necessary  co-existence  in  every  State,  of  agriculture 
and  the  special  mechanical  and  manufacturing  arts  which  give  em- 
ployment to  the  largest  number  of  persons  and  which  must  ac- 
company agriculture. 

It  will  be  observed  that  in  Ohio  the  proportionate  occupation 
of  the  people  is  as  follows  : 

Agriculture       ..........  41  per  cent 

Professional  and  personal  service      .  .  .  .  .  .  25        " 

Trade  and  transportation  .          .         .         .         .         .         .  10       " 

Manufacturing,  mechanical,  and  mining  .  .  .  .  .  24       " 

100 

If  we  apply  this  analysis  to  one  of  the  youngest  of  our  States, 
which  is  assumed  to  be  devoted  almost  exclusively  to  agriculture 
— Oregon — we  again  find  an  example  of  diversity  of  occupation 
which  proves  how  necessary  all  the  arts  are  to  any  State,  even  it 
there  are  no  great  factories  within  its  limits. 

The  population  of  Oregon  in  1880  was  174,768,  of  whom  67,343 

were  occupied  in  gainful  work  in  the  following  proportions,  or 

I  in  2.60  : 

Agriculture            ......  27,091  .  40.3  per  cent. 

Professional  and  personal  service            .          .  16,645  24.7       " 

Trade  and  transportation       ....  6,149  •           9           " 

Manafacturing,  mechanical,  and  mining        .  17,458  •  26 

67,343  100 

Another  example    may  be    found   in    Kansas,  another    young 
State,  as  yet  devoted  mainly  to  agriculture  : 
Population  in  1880,  996,096.     Occupied,  322,285,  or  i  in  3.09. 

Agriculture 206,080        .  63.94  per  cent 

Professional  and  personal  service       .         .        •   53,507         .  16.60        " 

Trade  and  Transportation         .         .         .           26,379         .  8.19        " 

Manufacturing,  mechanical,  and  mining  .           36,319         .  11.27       " 

322,285  100. 


7,670,493 

44 

4,074,238 

23-5 

1,810,256 

10.5 

3.837,112 

22 

THE  RATE   OF    WAGES?  1 53 

In  this  State  the  railroad  opened  the  way,  or  preceded  agricul- 
ture, and  the  true  balance  of  occupations  has  not  yet  become 
adjusted,  but  when  families  increase  and  the  true  balance  of 
population  is  attained  the  same  proportions  will  doubtless  be 
reached  as  in  Illinois  and  Indiana  or  other  prairie  States. 

In  the  whole  United  States  the  proportions  were  as  follows  : 

Agriculture 7,670,493  44     per  cent. 

Professional  and  personal  .... 
Trade  and  transportation  .... 
Manufacturing,  mechanical,  and  mining 

17,392,099  100 

In  the  great  States  in  which  diversified  industry  has  been  devel- 
oped most  freely  and  fully,  like  Ohio,  Indiana,  Illinois,  and 
Wisconsin,  the  proportions  of  the  occupations  of  the  people 
substantially  agree  with  the  average  of  the  whole  country  ;  while  in 
the  South,  where  all  diversity  was  forbidden  by  slavery,  a  rude 
kind  of  agriculture  was  until  lately  the  rule,  and  the  true  diversity 
of  free  civilization  is  just  beginning  to  assert  itself.  On  the  other 
hand,  on  the  sterile  soil  of  the  Eastern  States,  in  a  climate  in 
which  indoor  or  factory  occupations  are  most  consistent  with 
comfort  and  welfare,  the  manufacturing  and  the  mechanic  arts 
assume  the  preponderance  that  agriculture  possesses  elsewhere, 
while  what  little  good  arable  land  there  is  possesses  the  highest 
value. 

By  these  subdivisions  of  labor  the  quantity  of  labor  is  dimin- 
ished, and  the  quantity  of  product  is  increased  ;  then,  as  trans- 
portation becomes  less  and  less  costly  exchanges  cover  a  wider 
area.  Each  State,  and  each  section  of  a  State,  therefore,  takes 
up  the  work  for  which  its  soil  and  its  people  are  best  adapted, 
and  in  that  State  or  section  in  which  the  best  conditions  are  to 
be  found,  the  sum  recovered  from  the  sale  of  its  products  will 
yield  the  largest  profit  and  the  highest  wages,  corresponding  to 
the  low  cost  in  the  labor  in  the  work  done. 

If  each  State  could  be  content  to  work  out  its  just  results  in 
this  way,  there  would  be  less  contention  ;  but,  unfortunately,  the 


154  WHAT  MAKES 

representatives  of  a  few  very  much  concentrated  interests  arro- 
gate to  themselves  an  importance  which  becomes  somewhat  lu- 
dicrous when  subjected  to  comparison  with  others  that  excite 
little  attention. 

For  instance,  the  whole  country  is  now  disturbed  :  commerce, 
both  national  and  international,  is  adversely  affected  ;  construc- 
tive enterprise  is  checked  ;  large  numbers  of  people  are  thrown 
out  of  employment,  while  wages  are  consequently  depressed,— ^ 
simply  by  the  continued  coinage  of  light-weight  silver  dollars 
under  the  present  act  of  coinage. 

The  purchase  of  silver  bullion  for  this  coinage  is  continued  at 
the  instance  of  what  are  known  as  the  silver-producing  States, 
in  order  to  sustain  the  so-called  "  silver  interests "  of  the 
country. 

The  value  of  the  silver  produced  during  the  last  few  years, 
measured  by  comparison  with  the  standard  of  gold  has  been 
about  forty  million  dollars  a  year. 

Under  an  act  of  Congress,  more  than  half  this  product  of 
silver  is  purchased  by  the  Treasury  in  the  form  of  silver  bullion, 
and  is  coined  into  light-weight  dollars,  which  are  not  wanted  for 
use,  and  which  are  stored  in  costly  vaults.  The  average  tax 
which  is  imposed  upon  each  person  for  this  purpose  is  a  little 
over  forty  cents  a  year  ;  each  voter's  proportion  is  about  two 
dollars  and  a  half  a  year.  Perhaps  the  voters  of  this  country  are 
too  busy  to  pay  much  attention  to  so  small  a  perversion  of  the 
powers  of  Congress,  or  to  remedy  a  wrong  that  only  costs  twenty- 
four  million  dollars  a  year,  and  which  is  imposed  upon  them  in 
order  to  support  a  private  interest.  It  may,  however,  be  well  to 
assign  a  ratable  proportion  of  this  tax  to  some  of  the  towns  and 
cities  of  the  country,  in  order  to  show  their  share  of  this 
burthen  : 

New  York  City  pays  about $560,000 

Philadelphia          ««        «« 400,000 

Chicago                   ««        i< 240,000 

Boston                    an 160,000 

My  own  little  town  of  Brookline,  Mass.,  pays  about       .         .         .  4,000 


THE  RATE   OF    WAGES?  1 55 

'  This  purchase  of  silver  at  the  cost  of  the  taxpayers,  stimulates 
a  product  which  is  not  wanted  and  which  it  would  be  desirable  to 
leave  to  the  working  of  the  natural  laws  of  trade,  in  order  that 
the  true  ratio  of  silver  to  gold,  i.  e.^  the  true  value  of  silver  in 
terms  of  gold,  may  be  determined.  This  cannot  happen  so  long 
as  the  United  States  Government  "bulls  the  market,"  if  one  may 
use  the  slang  of  the  street.  This  measure  is  as  obnoxious  to  the 
bi-metallist  as  it  is  to  the  advocate  of  the  single  standard  of  gold. 

If  the  dangerous  nature  of  our  present  course  cannot  be  forced 
upon  public  attention  by  argument,  it  may  be  well  to  try  another 
method.  Let  us  measure  the  importance  of  the  silver  interest, 
so-called,  by  a  comparison  with  some  of  the  other  products  of  our 
mines  and  of  our  agriculture,  and  for  this  purpose  we  will  first 
compare  the  relative  importance  of  the  silver  mines  and  of  the  hen 
yards  of  the  country. 

The  census  valuation  of  eggs  and  poultry  was  far  below  that  of 
the  experts  who  compile  the  annual  data  of  our  poultry  and  dairy 
products,  but  assuming  that  our  hen  population  has  increased  in 
the  same  ratio  as  our  human  population,  our  annual  supply  of 
eggs  is  over  five  hundred  million  dozen,  which  at  the  low  price  of 
sixteen  cents  a  dozen  would  be  worth  $80,000,000. 

The  product  of  what  we  may  call  our  "  hen  industry  "  is  there- 
fore twice  that  of  our  silver  mines,  and  it  is  immeasurably  more 
important,  because  the  proceeds  of  the  sales  are  enjoyed  by  the 
least  wealthy  portion  of  our  farming  population,  while  the  pro- 
ceeds of  the  silver  mines  have  in  great  measure  gone  to  build  up 
a  few  "bonanza  fortunes,"  or  have  been  wasted  in  vain 
attempts  to  increase  an  excessive  and  comparatively  useless  pro- 
duct of  the  same  metal. 

The  most  competent  judge  in  this  country  of  the  cost  of  silver, 
the  owner  of  the  largest  silver-ore  reduction  works  in  the  world, 
(who  never  owned  but  one  silver  mine,  in  which  he  lost  every  cent 
which  he  put  into  it,)  lately  gave  me  his  deliberate  opinion  that 
every  dollar's  worth  of  our  present  silver  product  cost  the  country 
not  less  than  two  dollars  in  gold. 


1 56  WHA  T  MAKES 

But  let  us  compare  with  another  metal.  Iron  lies  at  the  foun- 
dation of  all  the  arts — it  is  immensely  more  important  than  silver 
The  producers  of  iron  are  struggling  under  adverse  conditions 
with  no  such  purchaser  as  the  United  States,  of  two  million  dollars' 
'worth  a  month  to  sustain  their  n^^rket ;  but  the  value  of  the 
product  of  our  iron  mines  is  more  than  double  that  of  silver,  and 
may  be  computed  in  this  year  of  depression  at  not  less  than 
$90,000,000.  Why  not  buy  $2,000,000  worth  of  pig-iron  per 
month  and  store  it  in  some  other  vaults  ?     ' 

Wool,  again,  is  one  of  our  lesser  farm  products  ;  it,  like  silver, 
has  been  stimulated  by  legislation  to  the  point  of  an  apparent 
excess  of  production  of  those  varieties  which  can  be  raised  in 
this  country,  so  that  the  price  is  very  low,  but  the  clip  of  this 
year,  which  now  comes  to  market  mostly  in  an  unwashed  condi- 
tion, is  yet  worth  fifty  per  cent,  more  than  the  silver  product,  the 
clip  of  1884  being  computed  at  320,000,000  lbs.,  which  at  20  cts. 
is  worth  $64,000,000.  Why  not  buy  $2,000,000  worth  of  wool  per 
month  at  the  cost  of  the  tax  payers  and  thus  stop  the  slaughter 
of  sheep  ? 

The  estimates  of  our  dairy  products  adopted  by  Mr.  J.  R.  Dodge 
of  the  Department  of  Agriculture  give  the  value  of  milk,  butter,  and 
cheese  at  $350,000,000,  or  about  nine  times  the  value  of  silver. 

But  perhaps  the  impudence  of  the  demand  of  the  silver  interest 
can  be  pictured  best  by  a  graphical  illustration,  which  will  bring 
the  relative  importance  of  the  respective  products  which  I  have 
cited  into  clearest  view.  I  will  give  my  own  computation  of  the 
value  of  the  products  of  the  hen  yards  in  1884  based  on  the 
census  of  1880,  and  also  the  commercial  valuation  of  poultry  and 
eggs  adopted  by  Mr.  Dodge,  which  are  now  computed  at  over 
$180,000,000  per  year. 

The  parallelogram  on  the  next  page,  enclosing  separate  graphi- 
cal comparisons  of  these  several  products,  represents  the  value  of 
the  annual  product  of  1884  on  the  basis  of  the  previous  computa- 
tions for  1880,  estimated  at  $11,400,000,000.  The  respective 
values  of  silver,  pig-iron,  wool,  and  dairy  products  are  drawn  on 
the  same  scale  as  the  outer  parallelogram. 


APPENDIX  VI. 


No  treatise  upon  wages  could  be  considered  in  any  measure 
complete,  without  some  reference  being  made  to  the  great  varia- 
tion in  the  purchasing  power  of  money.  With  wages  at  the 
same  or  nearly  the  same  rate  in  the  same  place,  one  family 
will  thrive  upon  an  income  on  which  another  will  almost  starve. 
The  reasons  are  not  far  to  seek,  but  in  order  that  the  case  may 
be  fully  comprehended,  attention  should  ^rst  be  given  to  the  ex- 
cellent and  varied  subsistence  which  may  be  procured  at  an  ap- 
parently very  small  cost. 

To  that  end  I  will  first  submit  an  analysis  of  the  cost  of  food 
in  a  large  factory  boarding-house  which  is  maintained  by  Messrs. 
Wm.  E.  Hooper  &  Sons,  owners  of  some  of  the  best  cotton-mills 
in  Maryland.  This  house  was  built  to  meet  the  wants  of  many 
women  who  came  to  work  in  the  village  where  they  had  no  rela- 
tives, and  who  were  compelled  to  board  in  insufficient  quarters, 
sometimes  four  in  a  room,  or  were  in  other  ways  subjected  to 
injurious  conditions. 

As  such  statements  as  this  possess  a  permanent  value,  being 
very  difficult  to  obtain  in  a  reliable  form,  I  will  give  the  cost  in 
all  its  detail  of  the  food  of  these  adult  women  for  six  months. 

EXPENSE    ACCOUNT,  JAN.   1ST    TO    JULY    1ST,   1884. 


Groceries. 

AVERAGE   PRICE. 

Flour .     . 

30  bbls. 

$5.40 

$162.00 

Corn  Meal 

245  lbs. 

.05 

12.25 

Buckwheat 

I   '• 

.05 

•05 

Rice 

80  " 

.06^ 

5.00 

Hominy  . 

2|1)US. 

1.40 

3.85 

Crackers  . 

33t-  lbs. 

.08 

2.70 

THE  RATE   OF  WAGES. 


59 


Groceries. 

AVERAGE    PRICE. 

Sugar 

2,291  lbs. 

$0.07t»A 

$168.74 

Syrup 

69TTr  gals. 

•30 

20.79 

Teas 

91  lbs. 

•43 

3913 

Coffee      . 

540  " 

.12^ 

67.50 

Yeast  Powder  . 

116  bottles 

.12 

13.92 

Candles    . 

32  lbs. 

.12 

3.84 

Soap 

1,074    " 

.07 

75.18 

Soda  (bicarbonate  and 

washing) 

ii6f  " 

.oii 

1-75 

Allspice  and  Cloves 

I     '• 

.28 

.28 

Nutmeg   . 

I    " 

1. 00 

I. GO 

Mace 



.15 

Ginger      . 

2  lbs. 

.12^ 

.25 

Pepper     . 

I5i" 

•ni 

2.67 

Mustard  . 

141" 

•25 

3- 70 

Cinnamon 

^" 

.34 

.10 

Flavoring  Extracts    . 

12  bottles. 

.12^ 

1.50    . 

Hops 

4  lbs. 

.35 

1.40 

Matches  . 

|-  gross. 

2.50 

2.00 

Indigo  Blue 

f     " 

2.50 

1. 00 

Salt 

if  sack. 

1.50 

2.62 

Vinegar    . 

32i  gals. 

.20 

6.50 

Saur-kraut 

ibbl. 

11.50 

Starch      . 

681-  lbs. 

.04i 

3.07 

614.44 

Vegetables. 

Potatoes  . 

ll\  bus. 

.49 

37-75 

Corn  (in  cans)  . 

33  doz. 

.95 

31.35 

Tomatoes  (in  cans)  . 

24f  " 

.85 

21.04 

Beans 

2of  bus. 

1.25 

25.75 

Peas 

8  J  " 

1.25 

10.25 

Turnips    . 

I  " 

•35 

.35 

Parsnips  . 

3  " 

.63i 

1.90 

Cabbage  . 

307  head. 

.071 

23.79 

Onions     . 

17  doz.  bunches. 

.25 

4.25 

Radishes . 

253    " 

.oif 

4.43 

Lettuce    . 

330  head. 

.02 

6.60 

Rhubarb  . 

109  bdls. 

.04i 

4.63 

Beets 

116    " 

.04i 

4.93 

Cucumbers 

qX  boxes. 

.75 

6.93 

Cymblings 

3      " 

1. 12 

3.36 

Carrots     . 

25  bdls. 

.03 

.75 

$188.06 

Fruits. 

Apples     . 

I  bu. 

.63 

.63 

i6o 


WHA  T  MAKES 


Fruits. 

AVERAGE  PRICE. 

Berries    . 

1 86  boxes. 

7C. 

$13.02 

Currants . 

14  lbs. 

9 

1.04 

Raisins    . 

II 

10 

1. 10 

Prunes     . 

16^    " 

7i 

12.12 

Fruit  Butter     . 

68      " 

7 

4.76 

$32.67 

Meats. 

Salt  Meat,  Ham      . 

652  lbs. 

13c.  to  15c.  per  lb.  ) 

"         "    Shoulder  . 

626    " 

8      "II          "      [ 

209.40 

•'    Breast       . 

288   " 

10     "11 

Beef,   Roast     . 

1,034   " 

10       "    ^ 

"       Steak     . 
Soup      . 

1,360   " 
137    " 

14     "    i 
9       "    ( 

338.43 

"       Corned  , 

527   " 

10       "    j 

Pork 

213    " 

lie.  and  I2C.  per  lb. 

24.66 

Lamb 

97   " 

12 

11.64 

Sausage  and  Pudding 

446  " 

10          " 

44.60 

Liver. 

137   " 

8 

10.96 

Scrabbles 

22   " 

15 

3.30 

Tripe       . 

28   " 

8 

2.24 

Lard 

434   " 

10 

4340 

6,001 

$688.63 

Oysters    . 

4  gals. 

$1.11 

4.44 

Fish 

26.42 

$30.86 

Butter      . 

462  lbs. 

20C. 

92.40 

Cheese     . 

69    " 

15 

IO-35 

Eggs 

264  doz. 

16 

42.24 

Milk 

473  gals. 

24 

113.52 

Mince  Meats   . 

155  lbs. 

loi 

16.27 

$274.78 

RECAPITULAT 

ION. 

Groceries 

. 

$614.44 

Vegetables      . 

. 

. 

188.06 

Fruits     . 

. 

, 

32.67 

Meats     . 

. 

. 

688.63 

Oysters  and  Fish     . 

. 

. 

30.86 

Butter,  Cheese,  etc. 

. 

. 

274.78 

$1,829.44 


THE  RATE   OF  WAGES?  l6l 

Fifty-nine  women  were  boarded  six  months,  an  average  of  26J- 
days  each  month,  which  gives  9,292  days'  board.  The  cost  of 
food  was  $1,829.44,  or  at  the  rate  of  19^^  cents  per  day  for  each 
boarder. 

The  exact  number  of  servants  is  not  given  with  this  short 
term,  but  is  given  with  the  following  statement,  covering  four 
years,  1880  and  1883  inclusive.  If  the  proportionate  number  of 
servants  be  added  for  the  six  months  covered  by  the  foregoing 
details,  it  would  doubtless  reduce  the  cost  of  food  per  capita  to 
about  18  cents  as  against  20  cents  for  the  previous  four  years, 
giving  an  example  of  the  general  reduction  in  the  cost  of  subsis- 
tence which  has  occurred  in  the  year  1884. 

Without  going  into  the  exact  details,  the  cost  of  conducting 
this  boarding-house  for  the  four  years,  1880  to  1883,  ^"^^  ^^^*  ^^ 
given,  and  the  proportions  of  the  food  will  be  shown  by  the 
graphical  method.     (See  page  162.) 

It  will  be  observed  that  the  number  of  days  represented  by  the 
boarders  is    ........         .         99,456 

To  which  must  be  added  for  the  servants         .         .         17,520 


Total  ....       116,976 

which  total  being  divided  into  the  cost  of  the  food,  gives  a  result 
of  a  fraction  less  than  twenty  cents  per  day. 

Many  curious  points  will  be  observed  in  this  bill  of  fare. 

I  St.  Nearly  every  one  will  be  surprised  at  the  relative  cost  of 
sugar,  as  compared  to  farinaceous  food.  This  case  is  not  excep- 
tional,— such  is  a  very  common  almost  universal  rule. 

2d.  The  very  small  use  of  corn  meal  as  compared  to  wheat 
flour.  The  use  of  corn  meal  as  the  principal  farinaceous  food 
appears  to  be  confined  to  the  black  population  of  the  South  ; 
next  to  them  the  Yankee  of  New  England  makes  the  greatest  use 
of  "  brown  bread  "  and  "  Johnny  cake."  It  is  also  apparent  that 
two  very  important  and  nutritious  articles  of  New  England  diet 
are  wanting  in  Maryland,  to  wit  :  cod-fish-balls  and  baked  beans. 

3d.  The  quantity  and  variety  of  vegetable  food. 


N 

Q. 

>. 

i2 

c 

0 

g 

•o 

•*» 

o 

U* 

t-i 

JS 

0 

be 

1 

J 

•o 

•a 

V 

vS 

^ 

o 

d 

0 

>. 

•o 

^0 

fe 

•s 

c4 

1 

1 

^ 

l4 

<U 

o 

.£3 







0 

«4 

'I 

bT 

«^ 

o 

3 

'O 

2 

— 

1 

b 

H 

U    [] 


THE  RATE   OF  WAGES  ?  1 63 

4th.  The  large  proportion  which  fresh  b'eef  bears  to  all  other  meat. 

Consideration  may  next  be  given  to  the  cost  of  subsisting 
prisoners  in  all  the  jails  of  Massachusetts. 

These  prisoners  are  served  with  the  best  quality  of  bread  ; 
beef  which  consists  of  the  carcases  of  beeves  of  first  quality, 
from  which  the  best  cuts  have  been  taken  for  hotels,  the  remain- 
der of  such  special  stock  being  purchased  on  contract  ;  vegetables, 
tea,  rye  coffee,  sugar,  and  other  articles  substantially  necessary. 

The  average  cost  of  the  materials  used  for  food  delivered  at 
the  jails  in  1883  was  $44.45  per  head,  or  a  trifle  over  15  cents  per 
day  for  each  prisoner. 

But  the  subsistence  of  the  employes  in  the  prisons  is  included 
in  this  sum,  and  they  constitute  over  ten  per  cent,  of  the  whole 
number  whose  food  is  represented  in  this  cost-statement,  while 
their  food  is  doubtless  more  varied.  This  reduces  the  average, 
and  in  some  of  the  larger  jails  the  economy  of  material  is  greater, 
so  that  the  cost  per  head  is  even  as  low  as  12  cents  a  day. 

In  the  separate  prison  for  women  each  prisoner  is  weighed 
when  committed  and  when  discharged,  and  almost  all  gain  in 
weight  during  their  term  of  imprisonment. 

The  cost  of  food  in  this  women's  prison  for  1881  was  $14,713.04, 
which  sufficed  for  the  supply  of  prisoners,  employes,  and  officials 
for  98,550  days,  or  a  fraction  less  than  15  cents  per  day. 

Next  we  may  consider  the  cost  of  subsisting  factory  operatives 
in  New  England, — male  and  female. 

I  have  been  able  to  obtain  only  one  statement  from  a  village 
in  Central  Massachusetts,  as  follows  : 

COST   OF  BOARDING  1 7   ADULT  MEN  AND   8   WOMEN  (3   SERVANTS)  FOR 
SIX   MONTHS,    IN    1884. 

Meat  and  fish $540 

Butter,  cheese,    eggs,  and  milk 336 

Vegetables 72 

Flour  and  meal •         •         •         .         .  132 

Sugar  and  syrup •         •         .  87 

Tea  and  coffee    ....,,,,,,.  54 

Fruit,  green  and  dry            ••••••••.  33 

Spices  and  salt •••  24 

Total        ....         -  .         •         •        .         .     $1,278 


104  WHAT  MAKES 

This  sum  represents  4,575  days'  board  at  28  cents  per  day  to 
€ach  boarder.  These  boarders  being  principally  men  engaged 
in  arduous  mechanical  work,  it  will  be  observed  that  the  quan- 
tity of  food,  especially  of  meat,  is  large,  and  the  cost  cor- 
respondingly high,  as  compared  to  the  subsistence  of  women  in 
Maryland.' 

On  the  basis  of  these  and  other  data  which  have  come  under 
my  notice,  there  can  be  no  question  that  an  ample  and  varied 
supply  of  nutritious  food  can  be  supplied  in  the  Eastern  portion 
of  the  United  States  at  a  cost  not  exceeding  20  cents  per  day,  or 
$1.40  per  week,  and  probably  for  a  less  sum  in  the  West,  pro- 
vided it  is  judiciously  purchased  and  economically  served. 

I  have  given  the  cost  of  the  rations  of  "  hog  and  hominy,"  /.  <?., 
bacon  and  corn  meal,  furnished  negro  laborers  at  the  South  at  a 
cost  of  50  to  70  cents  per  week,  to  which  must  be  added  chickens 
raised  by  themselves  (or  by  others),  vegetables  (each  laborer 
customarily  having  a  garden-patch),  fish  which  abound  in  many 
places,  sugar,  molasses,  and  salt.  Perhaps  $1  a  week  would  cover 
the  whole. 

If  it  is  suitable  to  assume  that  these  three  classes,  to  wit : 

ist.     Adult  women  engaged  in  factory  work  in  Maryland  ; 

2d.     Prisoners  in  Massachusetts  jails,  mostly  adult  men  ; 

3d.  Workmen  and  factory  operatives,  male  and  female,  in  New 
England,  may  be  taken  as  exponents  of  the  consumption  of  food 
necessary  to  comfortable  subsistence  throughout  the  country  at 
an  average  of  20  cents  per  day,  or  $73  per  year,  then  the  total 
cost  of  necessary  food  of  the  population  of  the  United  States,  in 
the  census  year,  might  be  approximated  as  follows  : 

'  A  very  large  portion  of  the  students  in  Harvard  University  take  their  meals 
at  a  "commons"  table  in  Memorial  Hall  which  is  conducted  by  an  efficient 
steward,  and  the  actual  cost  is  divided  per  capita.  During  the  terms  of  1883-4 
the  average  cost  of  food  per  week  was  $2.59,  or  37  cents  per  day.  Preparation 
and  service,  including  steward's  salary,  brought  the  charge  to  each  student  up 
to  $4.12.  The  cost  of  the  first  month  of  the  autumn  term  of  1884  has  been 
reduced  to  $3.97  for  the  whole  service. 


THE  RATE   OF  WAGES?  1 65 

Persons  10  years  and  above,  numbering  36, 761:, 607,  at  $73 

per  year $2,683,597,311 

Persons  below  10  years,  numbering  13,394,176,  at  $40  per 

year 535,767.04a 

Total $3,219,364,351 

Even  this  sum  would  be  more  than  twice  the  value  of  all  cloth- 
ing made  from  textile  fabrics,  domestic  and  foreign,  carpets,, 
upholstery  fabrics,  laces,  ribbons,  etc.,  etc.  ;  with  garments,  in- 
cluded, also  including  buttons,  tapes,  and  other  materials  used  in. 
garments  ;  and  also  including  the  first  washing,  starching,  and 
packing  of  shirts  or  other  similar  garments  when  made  in  facto- 
ries, which  items  in  the  case  of  shirts,  cost  more  than  the  making 
or  stitching  ;  all  of  which  I  have  computed  at  the  lump  sum  of 
$1,500,000,000.^ 

But  while  textile  fabrics  and  garments  of  all  staple  or  necessary- 
kinds  are  sold  at  the  least  possible  margin  of  profit  ;  and  while 
every  scrap  of  waste  is  saved  ;  also  while  garments,  as  a  rule,  are 
worn  out  by  some  one  before  they  go  to  the  paper-maker  or  to 
the  shoddy  mill  to  be  reconverted, — most  articles  of  food  are 
subjected  to  the  greatest  waste,  either  in  purchasing,  cooking,  or 
in  consumption. 

The  examples  which  I  have  taken  represent  food  purchased  in 
considerable  quantities  at  wholesale  prices,  cooked  properly  and 
with  economy,  and  used  carefully  with  the  least  measure  of  waste. 
Yet  at  this  average  the  value  of  the  food  would  be  $3,220,000,000 
Add  the  clothing  and  other  textiles         ,         .  1,500,000,000 


Making  a  total  for  food  and  clothing  of  .         $4,720,000,000 

m  '  This  lump  sum  was  reached  by  taking  as  a  basis  the  census  value  of  all  the 
textile  fabrics  made  in  the  United  States,  adding  thereto  the  imports,  then 
sorting  out  those  which  were  ready  for  consumption  as  they  come  from  the  fac- 
tory. The  remainder,  being  materials  used  in  garments,  were  then  computed 
as  clothing,  by  obtaining  the  average  ratio  which  the  value  of  the  cloth  bears  to 
the  completed  garments  ready  for  sale.  The  result  must  be  very  nearly  cor- 
rect, and  it  gives  an  average  of  $30  per  head  of  ;  opulation  for  clothing,  carpets, 
laces,  ribbons,  and  other  textiles. 


1 66  WHA  T  MA  KE  S 

which  is  a  little  less  than  fifty  per  cent,  of  the  sum  of  my  com- 
putation of  the  total  product  of  the  country,  and  is  over  fifty 
per  cent,  of  the  total  consumption  of  the  country  aside  from 
additions  to  capital,  estimated  at  $9,000,000,000. 

But  at  this  ratio  food  would  be  only  about  thirty-three  per  cent, 
of  the  whole  cost  of  living.  Now  it  will  be  observed  that  Dr. 
Engel,  of  Berlin,  Carroll  D.  Wright,  of  Mass.,  and  other  fully 
competent  authorities  compute  the  ratio  of  the  prime  cost  of 
food  consumed  in  the  families  of  workingmen  at  fifty  per  cent,  of 
their  income  in  respect  to  the  thrifty  and  well  paid,  but  at  sixty 
per  cent,  of  the  whole  income  of  common  laborers  or  persons  whose 
wages  are  low.  Therefore  this  low  ratio  is  not  a  true  one,  and 
the  actual  price  or  cost  of  food  is  doubtless  more  than  this 
standard  and  the  difference  between  $3,220,000,000  and  a  sum 
perhaps  fifty  per  cent,  greater  is  the  measure  of  the  waste  or  want 
of  economy  in  the  purchase  and  use  of  food. 

No  one  can  doubt  that  the  actual  cost  of  food  prepared  for 
use  in  workingmen's  families  would  be  on  the  average  either 
twenty-five  to  forty  per  cent,  more  than  the  standard  of  twenty 
cents  a  day  in  money,  in  the  more  densely  populated  parts  of  the 
country  ;  or  else,  if  only  twenty  cents  a  day  were  spent,  it  would 
fail  to  yield  half  as  good  a  subsistence  as  is  obtained  in  the 
establishments  cited,  for  want  of  skill  both  in  purchasing  and  in 
cooking. 

Let  it  be  observed  that  while  it  is  proved  by  these  statements 
that  an  ample  and  varied  subsistence  can  be  supplied  to  adults 
at  twenty  cents  a  day,  even  in  the  Eastern  states  which  are  most 
distant  from  the  fertile  plains  of  the  West,  no  such  economy  is 
realized  except  under  'similar  conditions  to  those  cited.  But  if 
we  add  only  five  cents  a  day  on  the  basis  of  the  census  popu- 
lation wc  must  add  $912,500,000  to  the  aggregate  cost,  and  at 
ten  cents  more  we  must  add  $1,825,000,000. 

The  former  sum,  added  to  the  previous  computation  of  $3,200,- 
000,000  at  twenty  cents  a  day,  would  bring  the  total  cost  of  food 
at  the  place  of  consumption  up  to  $4,100,000,000,  or  twenty-five 


THE  RATE   OF  WAGES?  \6f 

cents  a  day,  which  would  be  still  far  less  than  fifty  per  cent,  of 
the  commercial  product  of  $9,000,000,000. 

Now  these  figures  may  be  true  or  they  may  be  merely  vision- 
ary statistics,  but  they  correspond  fairly  well  with  the  deductions 
of  economists  who  have  examined  into  the  conditions  of  particu- 
lar families.  Even  if  we  add  $1,000,000,000  to  the  computation 
of  20  cents  a  day  we  still  fail  to  reach  50  per  cent,  of  our  com- 
puted commercial  product. 

Whether  accurate  or  visionary  these  computations  bring  out 
one  great  fact  in  the  clearest  manner,  namely,  that  the  greatest 
cause  of  want  in  this  country  is  waste.  Whoever  can  teach  the 
masses  of  the  people  how  to  get  five  cents  worth  a  day  more 
comfort  or  force  out  of  the  food  which  each  one  consumes,  will 
add  to  their  productive  power  what  would  be  equal  to  one  thou- 
sand million  dollars  a  year  in  value. 

How  can  this  be  done  ?  In  my  treatise  on  "  The  Railway  and 
the  Farmer  "  I  have  given  a  diagram  of  the  cost  of  bread  in  New 
York,  showing  it  to  be  less  than  three  cents  a  pound,  and  I  have 
shown  that  it  can  be  profitably  sold  at  half  a  cent  per  pound 
profit,  or  at  six  cents  for  a  loaf  weighing  ij  pounds,  if  the  sales 
are  made  on  a  large  scale  over  the  counter  for  cash. 

But  the  price  of  bread  in  Boston  in  the  small  shops  is  five  to 
eight  cents  a  pound. 

Fish,  meat,  vegetables,  and  fuel,  when  sold  in  small  quantities 
are  subject  to  as  great  or  a  greater  advance  on  the  first  cost. 
The  grave  difficulty  is  to  cheapen  the  distribution  of  perishable 
commodities.  There  is  no  such  difficulty  in  regard  to  textile 
fabrics,  flour,  sugar,  or  other  staple  articles. 

In  the  body  of  my  treatise  I  have  made  the  statement  that  the 
highest  rents  are  paid  in  cities  for  the  right  to  make  use  of  the 
warehouses  or  shops  in  which  the  largest  amount  of  goods  can  be 
sold  at  the  least  possible  profit  or  advance  on  the  first  cost.  This 
rule  applies  to  every  branch  of  wholesale  distribution,  and  also 
applies  to  the  retail  distribution  of  staple  dry  goods  as  well  as  of 
flour,  of  sugar,  and  of  a  very  few  other  articles  of  food  ;   but  it 


1 68  WHAT  MAKES 

seems  to  have  no  application  to  the  retail  distribution  of  meat, 
vegetables,  fruit  or  to  the  conduct  of  any  of  the  small  shops  in 
the  poorest  districts.  Far  be  it  from  the  writer  to  impute  blame 
or  fault  to  the  small  shopkeepers,  bakers,  or  grocers  who  supply 
the  very  poor.  Dealing  in  small  quantities,  often  granting  dan- 
gerous credits,  and  paying  rents  which  are  relatively  very  high  in 
ratio  to  the  amount  of  their  possible  traffic,  their  small  gains 
necessarily  constitute  a  large  ratio,  or  per  cent,  on  each  article 
sold.  In  this  as  in  other  matters,  systematic  organization,  the 
use  of  a  large  capital  and  the  custom  of  making  very  large  sales 
at  very  small  profits  must  justify  the  great  traders  who  have 
absorbed  so  many  small  establishments.  Again,  we  must  revert 
to  relative  proportions.  Out  of  17,392,099  persons  engaged  in  all 
kinds  of  gainful  occupation  in  the  census  year  there  were  only 
1,810,256  occupied  in  trade  or  transportation,  or  between  10  and 
II  per  cent.;  but  in  just  the  measure  that  this  force  can  be 
reduced  will  the  cost  of  distribution  be  lessened. 

One  may  well  study  the  methods  of  one  of  our  great  retail  dry- 
goods  stores  or  shops  as  an  example  of  what  might  perhaps  be 
accomplished  in  the  distribution  of  food  in  the  same  cities. 

Dry  goods,  so  called,  of  all  staple  kinds  are  distributed  at  a  very- 
small  advance  on  the  wholesale  prices,  and  it  is  doubtful  if  any 
organization  could  be  invented  for  lessening  the  cost  below  what 
it  now  is.  The  chief  profit  of  the  dealers,  as  well  as  the  principal 
customs  revenue  of  the  Government,  is  derived  from  goods  which 
depend  on  their  style  and  adaptation  to  the  passing  fashion  of 
the  season, — or  from  laces,  ribbons,  and  small  wares,  while  staple 
and  useful  goods  are  sold  at  a  fraction  above  their  cost. 

It  is,  of  course,  vastly  more  difficult  to  systematize  the  distri- 
bution of  perishable  commodities,  but  perhaps  it  may  be  done. 

This  is  the  great  problem  of  city  life.  How  shall  the  rate  of 
wages,  whatever  that  rate  may  be,  be  made  adequate  to  the  wants. 
of  him  who  earns  it  ? 

Let  it  be  reme?nbered  that  this  rate  is  the  measure  of  the  laborer  s 
share  of  all  there  is  produced^  but  that  all  there  is  isY^  EXCESS  ^ 


THE  RATE   OF  WAGES?  1 69 

all  the  wants  of  our  whole  population.  The  rate  would  suffice  for  an 
ample  subsistence  for  every  man^  woman^  and  child  in  all  our  broad 
landy  if  only  the  mechanism  and  the  metaphysics  of  distribution  could 
be  brought  luithin  the  rules  of  social  science. 

Cannot  bread  be  served  to  the  workmen  of  Boston  at  three 
cents  a  pound,  as  well  as  in  New  York  or  in  London  ? 

Cannot  the  waste  heat  of  the  bread  ovens  be  used  to  stew 
meats  and  to  make  strong  beef  broth  to  be  sold  over  the  counter 
with  the  bread  ? 

Cannot  methods  be  adopted  for  bringing  milk  and  vegetables 
within  easier  reach  of  the  poor,  who  need  them  most  ? 

Cannot  as  good  a  subsistence  be  supplied  outside  the  prisons 
at  12  cents  a  day  as  can  be  furnished  within  their  walls? 

In  other  words,  must  an  honest  man  become  a  thief  and  be  sent 
to  jail  in  order  that  an  ample  supply  of  excellent  food  may  be 
brought  to  his  door  at  a  cost  of  12  to  15  cents  a  day,  or  one  dollar 
per  week  ? 

The  average  which  I  have  given  is  above  the  limit  of  a  labor- 
er's ration  being  ^ItVo  P^^  week. 

Such  an  average  as  this  for  the  cost  of  an  ample  and  varied 
supply  of  food  will  appear  very  small  to  most  of  the  readers  of 
this  book,  but  it  is  not  for  such  persons  that  much  consideration 
is  needed.  The  case  to  be  provided  for  is  that  of  the  co77imon 
laborer  in  a  crowded  city,  the  measure  of  whose  share  of  the 
annual  product  is  what  one  dollar  a  day  will  buy, — or  perhaps 
one  dollar  and  a  quarter, — and  upon  whose  work  an  average 
family  of  four  other  persons  may  depend,  making  five  in  all. 
His  week's  wages,  assuming  that  he  is  in  constant  employment 
at  $1.25  per  day,  will  be  $7.50.  If  it  be  assumed  that  the  five 
members  of  his  family  consume  the  rations  of  three  and  a  half 
adults  only,  then  at  $1.40  per  week,  the  cost  of  food  would  be 
$4.90,  leaving  only  $2.60  for  rent,  clothing,  and  other  necessities 
of  life.  Of  course  such  a  proportionate  expenditure  for  food  is 
hardly  to  be  considered,  yet,  upon  the  average  determined  by  the 
investigations  of  Dr.  Engel  and  Carroll  D.  Wright,  such  a  man 


I/O  THE  RATE   OF  WAGES. 

would  expend  sixty  per  cent,  of  his  wages,  or  $4.50  per  week  for 
food.  But  then  comes  the  question  :  How  much  food  does  he 
get  for  his  money  and  how  is  it  cooked  after  he  buys  it  ?  On 
the  answers  to  these  latter  questions  rest  comparative  want  or 
welfare.  If  common  laborers  in  cities  could  be  supplied  with 
food  as  well  and  as  cheaply  as  the  prisoners  in  our  jails,  /'.  ^.,  at 
$1  per  week,  then  in  the  case  which  1  have  assumed  food  would 
cost  but  $3.00,  and  $4.50  would  be  left  for  other  expenses. 

Cannot  the  distribution  of  meat,  bread,  fish,  vegetables,  and 
milk  be  organized  and  made  profitable  with  large  sales  at  small 
profits,  as  well  as  the  distribution  of  calicos,  blankets,  and  petti- 
coats ?  Perhaps  with  a  little  more  risk  and  a  somewhat  larger 
ratio  of  advance  on  cost  because  of  their  perishable  nature,  but 
yet  in  such  a  way  as  to  reduce  the  present  cost  of  subsistence  in 
a  very  large  measure  ? 

Lastly,  can  cooking  be  taught  in  the  public  schools  or  else- 
where ? 

Cannot  a  waste  of  food  equal  to  five  cents  a  day  on  the  aver- 
age be  prevented  ?  Is  there  such  a  waste  ?  If  there  is,  its  meas- 
ure is  over  one  thousand  million  dollars  a  year.  Let  him  who 
doubts  such  waste  glance  at  the  contents  of  the  dinner-pail  of 
the  next  laborer  whom  he  passes  at  the  noon  hour,  or  take  a  meal 
with  an  average  laborer's  family. 

Upon  the  answers  which  may  be  given  to  these  questions,  the 
adequacy  of  the  wages  of  workmen  in  cities  will  mainly  depend, 
whatever  the  rate  of  their  wages  in  money  may  be. 
;     This  is  but  another  phase  of  the  question  which  forms  the 
title  of  this  treatise  : 

WHAT    MAKES    THE    RATE    OF    WAGES  ? 


APPENDIX  VII. 


It  may  be  suitable  to  assume  that  the  average  quantity  of  food 
served  to  adult  women  in  a  factory  boarding-house  in  Maryland 
is  a  fair  standard  of  the  average  consumption  of  the  working 
people  of  the  United  States,  in  quantity  if  not  in  kind,  and,  if 
we  apply  the  ascertained  facts  in  this  example  by  computations 
covering  the  whole  population  of  the  census  year,  numbering  in 
round  figures  50,000^000,  we  may  reach  an  approximate  estimate 
of  the  total  value  of  food  at  the  point  of  consumption,  and  then 
by  comparison  with  the  estimates  of  the  value  of  farm  products 
at  the  place  of  production,  made  in  the  Department  of  Agricul- 
ture, we  may  approximately  test  the  accuracy  of  all  the  conclu- 
sions or  hypotheses  relating  to  the  cost  of  subsistence,  which  are 
made  use  of  in  this  essay. 

The  diagram  given  on  a  previous  page  gives  the  actual  cost  of 
the  food  consumed  by  seventy-four  boarders  and  six  servants,  in 
the  four  years  1880,  1881,  1882,  1883,  averaging  twenty  cents  per 
day  to  each  person,  in  this  boarding-house. 

It  will  be  observed  that  this  food  was  well  bought,  in  consider- 
able quantities  at  a  time,  and  was  economically  cooked  and  served. 

In  the  following  table  the  proportion  of  each  kind  of  food  con- 
sumed by  one  person  in  one  year  is  given  in  the  first  column,  and 
in  the  second  column  the  gross  sum  is  given  which  this  would 
represent,  if  each  person  in  a  population  of  fifty  million  enjoyed 
the  same  rations. 

Article  of  Food.                                           Per  Person.  For  50,000,000. 

Meats  (including  poultry,  fish,  and  oysters)  .         .    $27.70  $1,385,000,000 

Butter,  cheese,  and  nylic I2.i8  609.000,000 

Eggs 1.85  92  500,000 

Vegetables 8.75  437,500.000 

Flour  and  meal     ...                  ...         7.64  382,500,000 

171 


\^± 


WHAT  MAKES 


Article  of  Food.  Per  Person. 

Sugar  and  syrup $7.22 

Tea  and  coffee      .         .         .         .         .         .         .  3.16 

Fruit,  green  and  dry     ......  1.85 

Salt,  spices,  vinegar,  etc 1.67 


For  50,000.000. 

$361,000,000 

158.000,000 

92.500,000 

83,500,000 


Imported, — tea,  coffee,  most  of  the  sugar,  part  of 
the  fruit  and  spices,  etc.         .... 


72.02 


$3,601,500,000 
501,000,000 


Product  of  domestic  agriculture      ....     $62.00  $3,100,500,000 

It  is  easily  proved  that  the  consumption  of  sugar  and  syrup  by 
these  women  was  excessive  in  proportion  to  flour,  but  their  con- 
sumption of  meat  was  less  than  that  of  adult  men  in  Massachu- 
setts, as  will  presently  appear ;  while  children  under  ten  years  of 
age  would  consume  less  than  either,  and  the  very  poor  or  the 
common  laborers  of  the  country  would  be  able  to  buy  less  meat 
and  sugar,  and  would  depend  more  on  grain  and  fish. 

All  that  is  assumed  in  the  comparison  which  follows,  of  the 
foregoing  total  with  the  computed  value  of  the  food  products  of 
agriculture  made  by  Mr.  J.  R.  Dodge,  is  that  the  aggregate 
consumption  of  eighty  working  women  in  Maryland  is  a  fair 
standard  by  which  to  measure  a  good  and  sufficient  proportion 
of  food  for  the  whole  population. 

Before  we  venture  upon  this  comparison,  we  may  observe  the 
cost  of  the  larger  ration  of  each  one  of  the  seventeen  adult  men 
and  eight  women  in  Massachusetts,  at  the  rate  of  28  cents  a  day, 
or  $io2-j2y^  per  year.  This  annual  ration,  when  subdivided,  was 
as  follows,  for  one  person  one  year  or  one  day  : 

Meat  and  fish     . 

Milk,  butter,  cheese,  and  eggs 

Vegetables 

Flour  and  meal 

Sugar  and  syrup 

Tea  and  coffee  . 

Fruits — green  and  dry 

Salt,  spice,  vinegar,  etc. 


Imported  about 
Domestic  production 


Per  Year. 

Per  Day. 

.     $43-20 

.1182  cents. 

.        26.88 

0737 

5.76 

.0158 

10.56 

.0290 

6.96 

.0190 

432 

.0118 

2.64 

.0073 

1.92 

.0052 

$102.24 

28  cents. 

• 

11.24 

$91.00 


THE  RATE   OF  WAGES?  1 73 

If  we  consider  this  average  expenditure  per  day,  we  may  find 
that,  although  its  measure  is  without  doubt  a  large  one  as  com- 
pared to  the  expenditure  for  food  which  is  possible  to  the  common 
laborer,  especially  in  cities,  and  that,  even  though  such  a  laborer 
should  spend  as  much  money  he  could  not  get  as  much  for  it — 
yet,  even  when  the  money  is  well  spent,  it  will  not  give  any  ex- 
cessive quantity,  or  very  extra  quality  of  provisions. 

The  laborer  who  should  spend  28  cents  per  day  for  food  in  the 
most  intelligent  manner,  to  be  prepared  at  home  in  the  propor- 
tions indicated,  could  obtain  in  Boston  to-day  for  iiy^^2_  cents, 
about  half  a  pound  of  good  beef,  mutton,  or  poultry  ;  about 
three  quarters  of  a  pound  of  fair  quality  of  meat  ;  or  one  pound 
of  coarse  fresh  meat,  salt  meat,  sausages,  or  fresh  fish. 

7tVo  cents  spent  on  dairy  products  and  eggs  would  give  him 
half  a  pint  of  milk,  2  oz.  of  fair  butter  or  ij-  oz.  of  good  butter, 
I  egg — **shop  'un," — and  a  scrap  of  cheese. 

2to*V  cents  would  give  him  half  a  pound  of  good  bread,  oi 
meal  and  flour  equivalent  to  about  one  pound. 

^tVo"  cents  would  give  him  between  3  and  4  oz.  of  sugar  ;  and 
^tVo  cents  spent  on  tea  and  coffee  might  give  him  one  cup  ot 
each  per  day,  or  one  of  either,  night  and  morning. 

This  would  be  the  utmost  if  the  money  were  spent  with  care 
and  intelligence  ;  whether  the  money  would  yield  50  or  75  per 
cent,  as  much  would  depend  upon  the  personal  capacity  of  him 
who  spent  it.  The  average  laborer  would  probably  obtain  about 
as  much  for  28  cents  as  the  Maryland  factory  operative  enjoys 
for  20  cents  per  day,  the  food  of  the  latter  being  well  bought. 

These  data  are  entirely  insufficient  as  a  basis  for  rules  ;  they 
are  merely  given  as  an  indication  of  what  might  be  accomplished 
in  improving  the  distribution  of  food  if  the  Chiefs  of  the 
Bureaux  of  Statistics  of  the  several  States  would  adopt  a  uniform 
schedule  and  plan  for  ascertaining  the  relative  proportions  and 
cost  of  the  food  consumed  in  the  private  families  of  working- 
men  and  women.  When  the  facts  are  known  the  method  oi 
improvement  may  become  apparent. 


174  WHAT  MAKES 

As  this  average  ration  is  used  as  a  standard,  then,  counting  each 
two  children  of  ten  years  or  less  as  one  adult,  the  total  consump- 
tion of  food  of  domestic  production  in  the  census  year  would 
have  been  valued  at  about  $3,890,000,000, — but  it  is  hardly  to  be 
assumed  that  the  average  adult  person  enjoyed  as  large  a  ration 
as  did  these  men  and  women  in  New  England,  whose  food  was 
carefully  purchased  and  served.  The  average  of  the  Maryland 
women  is  probably  a  much  truer  standard  of  comparison. 

In  each  case  attention  is  called  to  the  vast  aggregate  of  the 
value  of  dairy  products  and  eggs,  indicated  by  both  these  tables, 
and  to  the  fact  that  the  money-cost  of  sugar  and  syrup  is  not 
less  than  eighty  per  cent,  of  the  cost  of  the  flour  and  meal.  Sev- 
eral years  since,  when  the  writer  had  the  direct  charge  of  a  large 
cotton  factory,  when  sugar  was  much  higher  in  price,  he  found 
that  the  sugar  consumed  by  a  large  body  of  French  Canadian 
operatives  cost  more  than  the  flour. 

Counting  two  children  as  one  adult,  and  then  extending  the 
ration  of  butter,  cheese,  milk,  and  eggs  in  the  Massachusetts 
boarding-house  to  the  whole  population,  the  aggregate  of  this  one 
item  would  have  been  over  $1,000,000,000,  at  retail  prices. 

These  statements  may  seem  to  possess  only  a  curious  interest  ; 
but  may  it  not  be  held  that,  when  special  legislation  is  demanded 
in  order  to  sustain  special  interests — as  in  the  case  of  the  silver 
product, — some  standard  of  comparison  should  be  established  by 
means  of  which  the  utter  insignificance  of  the  silver  production 
of  $40,000,000  may  be  made  apparent  ?  These  are  retail  prices, 
and  it  is  just  at  this  point  of  final  or  retail  distribution  that  de- 
basement of  the  currency  works  the  most  malignant  fraud. 

One  needs  only  to  recall  the  manner  in  which  shrewd  buyers 
availed  themselves  of  the  opportunity  to  buy  great  stocks  of 
goods  when  the  legal-tender  notes  issued  during  the  war  began 
to  depreciate,  and  then  availed  themselves  of  the  rise  in  prices 
which  ensued  to  make  huge  fortunes,  to  comprehend  the  result 
which  will  follow  the  depreciation  of  our  present  currency  when 
the  light-weight  silver  dollar,  worth   only  85  cents,  drives  gold 


THE  RATE   OF  WAGES?  I75 

from  circulation.  But  in  the  present  case  this  malignant  effect 
will  be  rendered  more  intense,  because  there  will  be  no  war  de- 
mand to  stimulate  production.  Constructive  and  productive 
enterprise  will  be  reduced  to  the  point  of  absolute  necessity,  and 
the  rate  of  wages  will  be  thereby  reduced  at  the  very  time  when 
the  money  in  which  wages  are  paid  will  lose  fifteen  per  cent,  of 
its  purchasing-power. 

Such  are  the  consequences  of  fraud  perpetrated  under  the 
forms  of  law,  and  such  will  be  the  consequences  of  the  continued 
coinage  of  silver  dollars,  if  members  of  Congress  continue  to 
submit  to  the  dictation  of  the  so-called  Silver  States,  whose 
whole  annual  product  of  silver  is  worth  less  than  half  the  annual 
product  of  hens'  eggs. 

If  reference  be  now  made  to  the  estimate  of  Mr.  Dodge,  of  the 
value  of  agricultural  products  at  the  points  of  sale  nearest  the 
farms,  which  is  what  I  understand  to  be  the  "  farm  value  "  so- 
called,  we  find  the  product  of  grain,  meat,  dairy  products,  vege- 
tables, and  other  articles  which  are  used  for  the  food  of  men, 
estimated  at  $2,900,000,000 ;  but  from  this  estimate  corn  fed  to 
beasts  of  burden  should  be  deducted,  and  hay,  converted  into 
meat  and  dairy  products,  should  be  added.  It  may  be  assumed 
that  one  would  about  balance  the  other,  and  that  the  net  value 
of  human  food  at  the  farms  was  as  above  stated. 

In  the  essay  on  "  The  Railroad,  the  Farmer,  and  the  Public," 
I  have  computed  the  proportion  of  food  products  moved  by  rail 
at  one  half  the  total  tonnage.  On  this  basis  we  must  add  $200,- 
000,000  for  the  cost  of  moving  food  from  producer  to  consumer. 

Net  value  of  food  at  Ihe  farms         ......     $2,900,000,000 

Cost  of  transportation 200,000,000 


3,100.000.000 
Deduct  exports  estimated 440,000,000 


Remainder $2,660,000,000 

By  comparing  this  sum  with  the  previous  computation  of  the 
value  of  food  consumed,  at  the  place  of  consumption,  we  find  a 


176  WHAT  MAXES 

'difference    of    5440,000,000,  which    is    easily   accounted   for   as 
follows  : 

1.  Cost  of  milling  grain  and  barrelling  flour. 

2.  Cost  of  slaughtering  and  packing  animals. 

3.  Admitted  underestimate  in  the  computation  of  Mr.  Dodge, 
in  respect  to  the  production  of  vegetables  and  orchard  products. 

4.  Cost  of  distribution  at  wholesale. 

So  far  as  the  data  can  be  obtained,  the  difference  between  the 
two  sums  would  be  fairly  covered  by  these  items,  and  the  compu- 
tation of  consumption  therefore  fairly  sustains  the  estimate  of 
production  at  farm  values  if  the  standard  adopted  is  a  true  one. 

Attention  must  however  again  be  called  to  the  fact  that  the 
food  purchased  for  the  Maryland  boarding-house  was  bought  in 
considerable  quantities,  and  made  to  serve  its  utmost  purpose ; 
therefore,  a  considerable  addition  must  be  made  for  the  cost  of 
more  luxurious  consumption  of  the  more  prosperous  classes,  and 
it  must  be  borne  in  mind  that  the  small  purchases  at  retail  for 
single  families  will  give  each  person  a  much  less  quantity  of  food 
for  the  money  spent,  or  the  same  money  spent  will  buy  a  less 
quantity  of  food.  Hence  it  may  be  fairly  assumed  that  the  pro- 
portion of  the  productions  of  agriculture  consumed  in  the  coun- 
try, which  bore  a  value  in  the  census  year  of  $2,660,000,000  at 
the  farms,  fmally  cost  the  consumers  at  the  point  of  consumption 
about  <j4,ooo,ooo,ooo  or  §4,500,000,000  ;  which  sum  would  repre- 
sent an  average  of  §80  to  §90  per  year,  or  a  fraction  less  than  22 
to  25  cents  per  day,  for  each  person  of  a  population  of  50,000,000. 
In  saving  a  part  of  this  vast  difference  which  doubtless  exists 
between  the  farm  value  of  food,  §2,600,000,000  (with  the  charge 
of  $200,000,000  for  transportation  added  thereto),  and  the  sum 
paid  at  retail  for  the  same  quantity,  is  to  be  found  the  greatest 
opportunity  for  economy  and  for  benefit  to  common  laborers, 
especially  in  crowded  cities. 

In  this  computation  I  have  paid  no  attention  to  the  conversion 
of  grain  and  fruit  into  whiskey,  beer,  and  wine,  as  I  know  cf  no 
accurate  method  of  computing  the  excessive  cost  of  distributing 


THE  RATE  OF   WAGES?  1 77 

liquor  by  the  glass.  In  view  of  the  prime  cost  of  whiskey  and 
beer,  coupled  with  the  fact  that  a  revenue  of  about  $90,000,000 
is  derived  from  the  excise  tax  upon  them  ;  and  also  bearing  in 
mind  the  ratio  which  the  price  of  a  glass  of  liquor  bears  to  the 
cost  of  a  cask,  it  may  be  safely  assumed  that  drink  bears  a  ratio 
of  ten  per  cent  to  the  cost  of  food,  or  about  $400,000,000. 

Upon  the  basis  of  these  computations,  food,  drink,  tobacco, 
domestic  fuel,  and  light  cost  consumers  §4,500,000,000  to  $5,000,- 
000,000  ;  clothing,  carpets,  and  other  textiles  as  previously  com- 
puted, §1,500,000,000.  Total,  $6,000,000,000  to  $6,500,000,000, 
or  $120  to  $130  per  year  to  each  person,  on  the  basis  of  the 
population  of  the  census  year,  leaving  $4,000,000,000  to  $4,500,- 
000,000  for  all  other  expenses  of  living  and  for  profits,  on  the 
basis  of  a  total  of  $10,000,000,000  to  $10,500,000,000  product. 

In  submitting  this  final  analysis  of  so  complex  a  problem  it 
might  be  prudent  for  the  writer  to  add  the  customary  caveat^ 
which  would  be  consistent  with  his  long  practice  as  an  account- 
ant, "  E.  and  O.  E."— /.  e.,  "  Errors  and  Omissions  Excepted."  * 

'  A  second  edition  of  this  essay  may  be  called  for.  Readers  who  are  in  pos- 
session of  statements  of  the  cost  of  food  corresponding  to  the  one  herein  given 
from  the  books  of  the  Maryland  factory  boarding-house,  will  confer  a  great 
favor  on  the  author  if  they  will  send  them  to  him.  Address  P.  O.  Box  112, 
Boston. 


CONCLUSION. 


If  the  principle  which  is  submitted  in  this  treatise  can  be  sus- 
tained, to  wit  :  that  by  the  competition  of  capital  with  capital  the 
annual  product  is  increased  while  the  relative  share  of  the  capital- 
ist is  diminished,  and  that  no  more  can  possibly  be  saved  and 
added  to  the  capital  of  a  given  country  in  a  normal  year,  or  series 
of  years  of  peace  and  order,  than  is  necessary  to  keep  land,  build- 
ings, machinery,  and  tools  in  a  condition  of  maximum  efficiency  ; 
if  it  be  also  true  that  by  the  competition  of  labor  with  labor, 
aided  by  capital,  the  aggregate  of  products  is  increased,  of  which 
aggregate  the  laborers  receive  a  constantly  although  slowly  in- 
creasing share,  both  absolutely  and  relatively, — then  it  follows 
that  progress  and  poverty  have  no  natural  or  necessary  relation  to 
each  other  under  existing  customs,  or  as  a  consequence  of  com- 
petition. 

If  it  be  also  proven  that  the  measure  of  all  there  is  produced 
in  a  given  year,  when  converted  into  terms  of  money  by  bargain 
and  sale — in  other  words  by  exchange — must  be  the  source  of  all 
profits  and  wages,  and  that  whatever  this  sum  may  be,  it  consti- 
tutes the  limit  beyond  which  profits  and  wages  cannot  go,  then 
it  also  follows  of  necessity  that  by  so  much  as  one  man  secures 
more,  may  some  other  man  have  less  of  what  has  been  produced 
in  that  year. 

But  it  by  no  means  follows  that  the  welfare  of  the  one  is 
the  cause  of  the  want  of  the  other  ;  there  is  enough  for  all,  and 
the  common  cause  of  want  is  usually  ignorance,  unwillingness, 
or  incapacity  to  do  the  kind  of  work  which  is  waiting  to  be  done. 
It  would  not  be  a  pleasant  thought  to  any  man  to  feel  that  his 
larger  share  of  what  there  is  has  been  attained  at  the  cost  of  his 
fellow-man,  and  such  is  not  the  fact. 

178 


THE  RATE  OF  WAGES.  I79 

How  then  shall  the  just  man  justify  himself  if  he  be  rich  and 
prosperous  and  if  his  family  each  consume  far  more  than  what 
40  or  50  cents  a  day  will  buy  if  that  be  the  average  share  ;  or  if 
each  consume  more  than  his  average  measure  of  all  that  is  pro- 
duced, whatever  it  may  be  ? 

The  only  answer  to  this  question  is  that  he  must  either  work 
with  brain  or  hand  in  such  a  way,  or  make  such  use  of  the  capi- 
tal of  which  his  wealth  in  part  consists,  that  the  general  produc- 
tion shall  be  increased  in  greater  proportion  by  means  of  his 
work  than  the  measure  of  his  own  consumption.  And  this  is  the 
exact  function  of  the  capitalist.  In  one  sense  he  employs  labor 
— but  it  is  quite  as  true  that  labor  employs  him.  Just  as  instinc- 
tively as  an  army  of  soldiers  recognizes  its  true  leader,  does  an 
army  of  laborers  choose  its  own  capital.  The  best  workmen 
select  the  best  mill ;  the  best  managers  are  always  chosen  by  the 
best  workmen  to  serve  them  and  to  be  served  by  them. 

When  capital  under  skilful  direction  doubles  the  productive 
power  of  each  laborer,  and  leaves  him  the  larger  part  of  the  in- 
crease, personal  wealth  and  common  welfare  become  synonymous 
terms;  while,  on  the  other  hand,  he  who  wastes  but  does  not 
increase  production  in  any  way,  however  rich  he  may  be,  is 
really  but  a  pauper — that  is  a  person  who  is  supported  at  the 
public  cost. 

There  is  something  very  merciless  in  these  figures  which  make 
the  rate  of  wages,  and  in  the  face  of  them  the  shallow  nostrums 
of  the  greenback  party,  and  of  the  common  ruck  of  so-called 
"  labor  reformers  "  who  infest  the  lobbies  of  the  legislature  with 
all  sorts  of  empirical  projects  of  law,  become  worse  than  an  im- 
pertinence. 

It  is  true  that  the  measure  in  money  of  all  there  is  produced 
and  commercially  distributed  in  this  country  may  vary  a  little 
from  fifty  cents' worth  per  day  to  each  person,- including  all 
profits  as  well  as  wages ;  or  forty  cents  without  profits  ;  it  may  be 
a  little  more,  it  may  be  a  little  less. 

The  measure  of  the  savings  or  increase  of  capital  may  vary 


l8o  WHAT  MAKES 

slightly  from  five  cents  a  day  per  capita,  which  is  the  proportion 
that  I  have  set  aside  as  the  probable  amount. 

The  measure  of  all  the  taxes  which  are  now  three  and  a 
quarter  cents  a  day  to  each  person  can  be  reduced  to  two  and 
three  quarter  cents  and  no  more. 

Whatever  the  true  averages  may  be,  each  of  these  variations  of 
a  cent  or  less  would  count  in  millions. 

One  cent  a  day  added  to  the  resources  of  all  the  people,  or 
three  cents  a  day  added  to  the  average  wages  or  earnings  of  those 
who  do  the  work,  renders  an  increase  of  the  national  product 
necessary,  of  over  two  hundred  million  dollars'  worth  a  year  and 
a  market  must  be  found  for  the  increase. 

One  cent  a  day  taken  from  wages  and  added  to  savings  would 
alter  the  computed  sum  of  the  annual  addition  to  capital  from 
one  thousand  to  twelve  hundred  million  dollars,  or  twenty  per 
cent. 

Half  a  cent  a  day  remitted  from  our  excessive  taxation  would 
take  off  one  seventh  of  the  whole  burden,  amounting  to  one 
hundred  million  dollars  a  year. 

On  such  fractions  as  these  prosperity  or  adversity  depend. 

A  margin  of  only  a  cent  or  two  a  day  to  each  person  is  all  that 
separates  national  want  from  national  welfare,  or  rather  it  indi- 
cates the  difference  in  conditions,  because  on  such  a  margin  of 
profit  or  loss,  on  the  whole  traffic  of  the  country  constructive 
activity  or  weary  depression  may  be  determined. 

If  our  population,  January  i,  1885,  shall  be  58,000,000,  two 
cents  a  day  profit  on  each  person's  consumption  would  be  $423,- 
400,000 — a  sum  of  profit  which  would  set  eveny  wheel  of  industry 
into  most  rapid  motion.  Two  cents  a  day  loss  would  bankrupt 
thousands  of  merchants  and  stop  more  mills  and  works  than  are 
even  now  idle. 

When  legislators  pass  acts  by  means  of  which  they  intend  01: 
expect  to  control  the  course  of  productive  industry  and  to  raise 
the  general  rate  of  wages,  they  may  well  ask  themselves  how 
they  can  add  one  thousand  million  dollars'  worth  to  our  pres' 


THE  RATE  OF  WAGES?  l8l 

ejt  over-abundant  production,  find  a  market  for  the  increase, 
and  so  regulate  the  distribution  of  the  proceeds  of  the  sale  as  to 
give  each  person  five  cents  a  day,  or  each  working  man  or  woman 
fifteen  cents  a  day,  more  than  they  now  enjoy. 

As  well  might  each  member  of  Congress  try  to  add  one  cubit 
to  his  stature  as  to  attempt  to  do  this  thing — but  if  members  of 
Congress  cannot  construct  they  can  obstruct.  They  can  divert 
the  wage  fund  of  the  many  to  the  profit  of  the  few  by  acts  of  taxa- 
tion for  the  support  of  private  interests,  as  in  the  purchase  of  silver. 

At  any  moment  the  rate  of  wages  of  every  man,  woman,  and 
child  now  working  in  the  employment  of  others  may  be  impaired 
by  many  cents  a  day,  if  the  coinage  of  silver  dollars  of  light  weight 
and  worth  only  a  little  over  80  cents  is  not  stopped.  The  tax 
alone  which  is  imposed  in  order  to  buy  the  silver  is  but  a  trifle, 
but  the  malignant  effect  of  tampering  with  the  standard  of  value 
is  the  worst  evil  that  legislators  can  inflict  upon  the  people. 

The  completion  of  the  reading  of  the  proofs  of  the  principal 
part  of  this  treatise  happens  to  fall  upon  the  fourth  day  of  No- 
vember, 1884.  Two  days  from  this  time  it  will  be  announced 
that  one  or  the  other  candidate  for  President  has  been  chosen  to 
govern  the  United  States  for  the  ensuing  four  years,  together 
with  a  Congress  upon  whom  the  duties  of  legislation  will  fall. 
After  it  shall  have  been  announced  "  straightway  all  the  people 
will  return  to  their  usual  occupations,  and  will  govern  themselves 
according  to  their  common  habit."  But  their  material  welfare 
may  be  greatly  affected  by  the  measures  upon  which  this  or  some 
other  Congress  must  soon  act.  This  Congress  will  have  been 
chosen  with  little  or  no  regard  to  the  convictions  of  its  members 
— if  they  have  any  convictions — upon  the  great  fiscal  questions 
which  must  come  before  it,  and  after  no  adequate  discussion 
upon  them  among  the  people,  yet  it  will  find  itself  compelled  to 
grapple  with  the  problem  of  the  safe  method  of  abating  taxation  ; 
it  must  deal  with  the  coinage  of  silver  ;  it  must  face  a  necessary 
change  in  the  national  banking  system  which  will  ensue  under 
the  rapid  payment  of  debt.     It  must  deal  with  financial  prob- 


1 82  WHAT  MAKES 

lems  of  greater  difficulty  than  those  in  which  the  reputations  of 
the  greatest  men  of  England  have  been  made  or  lost.  With  each 
and  all  of  these  great  problems  it  will  probably  deal  in  a  purely 
empirical  and  inconsistent  manner  for  want  of  adequate  leader- 
ship, and  without  such  party  responsibility  as  is  necessary  to  the 
right  conduct  of  representative  government.  And  as  it  may  deal 
with  them  may  confidence  or  distrust  control  events,  and  may 
wages  and  profits  alike  be  left  free  to  increase  or  be  gravely 
diminished. 

It  will  probably  happen  that  such  a  Congress  will  accomplish 
little, — nothing, — or  perhaps  worse  than  nothing. 

In  this  event,  the  election  of  the  next  Congress,  which  will  be 
free  from  the  personal  issues  that  have  degraded  the  present 
election,  will  proceed  on  the  basis  of  a  discussion  of  measures 
rather  than  of  men. 

When  this  fortunate  period  arrives,  the  true  era  of  reconstruc- 
tion, both  North  as  well  as  South,  will  have  opened. 

Since  the  end  of  the  Civil  War  only  the  crudest  measures  have 
been  adopted  for  the  reorganization  of  industry. 

Equal  suffrage  has  been  established  so  far  as  it  can  be  assured 
by  national  statutes. 

The  restoration  of  a  specie  standard  has  been  brought  about, 
but  whether  it  shall  be  a  true  standard  of  gold  coin  or  a  false  one 
of  debased  silver  coin  is  not  yet  determined. 

The  abatement  of  some  of  the  most  onerous  taxes  has  been 
accomplished,  but  yet  more  remains  to  be  done,  and  the  real  test 
of  political  intelligence  and  of  statesmanship  is  before  us,  in  doing 
this  necessary  work. 

Under  what  conditions,  whether  of  apparent  general  prosperity 
or  adversity  in  this  and  in  other  countries,  the  next  Congress  may 
be  chosen,  no  one  can  predict. 

It  must  be  very  clear,  even  to  the  most  superficial  observer, 
that  the  present  conditions  of  an  apparent  excess  of  production 
and  want  of  market,  in  all  the  nations  which  have  applied  ma- 
chinery in  the  largest  measure  to  the  work,  whatever  their  fiscal 


THE  RATE  OF  WAGES?  183 

or  financial  policy  may  have  been,  must  have  been  caused  by 
forces  over  which  statutes  can  have  little  or  no  effect. 

May  it  not  be  that  the  complete  revolution  in  the  methods  of 
commerce,  which  has  been  brought  about  during  the  last  twenty 
years  by  the  railway,  the  steamship,  and  the  telegraph,  as  well  as 
by  the  application  of  science  and  machinery  to  agriculture,  has 
now  come  to  what  might  be  called  a  culminating  point,  after 
which  the  benefits  heretofore  enjoyed  mainly  by  the  producers 
and  distributers  of  the  staple  products  necessary  to  life  are  now 
in  process  of  wide  distribution  among  all  consumers  ?  In  other 
words,  may  it  not  be  that  under  the  beneficent  law  of  diminish- 
ing profits  and  increasing  wages  a  lower  plane  of  prices  on  a  gold 
basis  has  been  reached,  which  is  of  a  permanent  character  ?  This 
change  has,  for  the  time  being,  disturbed  all  the  existing  relations 
of  labor  and  capital,  and  is  destroying  many  great  fortunes,  while 
bringing  many  to  whom  the  struggle  of  life  seemed  to  be  ended 
again  to  the  necessity  of  arduous  work  ;  but  will  not  the  end  be 
greater  abundance  to  the  laborers  who  constitute  the  great  mass 
of  the  people,  shorter  hours  of  labor,  and  less  arduous  conditions 
of  life, — at  least  among  English-speaking  people,  and  especially 
in  this  country  ? 

I  have  attempted  to  show  how  very  large  a  proportion  of  the 
work  of  production  and  distribution  of  this  or  of  any  other  country 
must  go  on,  whether  the  "  times  "  are  "  good  "  or  "  bad."  I  have 
endeavored  to  prove  that  the  difference  between  "good"  and 
"bad  "  times  in  a  nation  which  is  at  peace,  consists  mainly  in  the 
question  whether  one  per  cent,  of  the  population  or  three  per  cent. 
of  the  working  force  is  idle,  or  whether  there  is  work  seeking  to 
be  done  which  would  give  employment  to  one  to  three  per  cent, 
more  men  than  are  to  be  found  ready  to  do  it.  In  other  lands,  and 
in  former  times  in  this  country,  the  full  employment  of  the  people, 
or  lack  of  employment,  has  been  a  question  of  abundance  or 
scarcity  ;  but  in  this  country  at  the  present  time,  as  well  as  in 
1873,  no  suspicion  of  scarcity  has  been  suggested.  An  excess  of 
production  exists,  and  in  the  effort  to  get  it  into  use,  the  rate  of  in- 


1 84  WHAT  MAKES 

terest  is  reduced, — what  Is  called  "  plenty  of  money  "  is  seeking 
borrowers.  This  plethora  of  money  is  merely  our  excess  of  grain, 
timber,  coal,  iron,  cotton,  wool,  and  cloth,  seeking  consumers. 
The  title  to  this  excess  is  measured  in  terms  of  money,  and  is  de- 
posited in  banks  ;  and  banks,  bankers,  and  trust  companies  seek  to 
find  consumers  who  will  pay  interest  for  its  use.  That  is  their 
function  :  they  lend  titles  to  consumable  property  or  quick  capital 
measured  in  terms  of  money,  but  the  proportion  of  actual  money 
used  in  these  transactions  is  less  than  five  per  cent,  of  the  aggre- 
gate. It  is  the  excess  of  certain  special  products  seeking  to  find  a 
wider  market  that  depresses  the  rate  of  interest.  It  is  not  money 
which  is  so  plentiful,  although  there  is  enough  of  that  ;  it  is  quick 
capital,  iron,  coal,  cotton,  corn,  wheat,  oil,  seeking  consumption, 
the  title  to  which  is  held  in  trust  by  banks  and  bankers,  and  for 
which  they  seek  borrowers.  When  a  wider  market  can  be  found 
for  what  we  call  over-production,  not  only  will  the  rate  of  wages 
be  maintained,  but  the  rate  of  interest  or  profit  on  invested  capital 
may  also  be  enhanced. 

This  wider  market  need  not  be  a  foreign  one, — we  have  still  a 
continent  to  subdue,  wanting  only  confidence  and  constructive 
enterprise. 

One  per  cent,  of  our  population,  numbering  over  five  hundred 
thousand  workers,  who  sustain  fiteen  hundred  thousand  persons, 
may  be  waiting  to  use  the  iron,  coal,  and  timber,  to  eat  the  grain 
and  to  wear  the  cloth,  but  cannot  get  it. 

Coined  money  is  plenty  ;  other  nations  send  coin  itself  with 
which  to  buy  a  part  of  our  excess  ;  but  more  of  the  excess  re- 
mains, and  yet  the  work  of  constructive  consumption  does  not 
begin.  It  is  the  old  nursery  tale  repeated — the  pig  won't  go  to 
the  market,  the  dog  won't  bite  the  pig,  the  stick  won't  beat  the  dog, 
the  fire  won't  burn  the  stick,  the  water  won't  quench  the  fire — and 
so  on. 

Why  does  not  the  pig  go  to  market  ?  Whoever  can  answer 
that  question  will  solve  the  puzzle  of  financial  crises  in  times  of 
peace  and  plenty. 


THE  RATE  OF  WAGES?  1 85 

One  reason  has  been  given  by  the  late  Walter  Bagehot,  in  one 
of  his  essays,  entitled  "  Physics  and  Politics,"  in  the  following 
paragraph. 

After  speaking  of  the  imitative  quality  of  men,  he  says  : 

"  The  grave  part  of  mankind  is  quite  as  liable  to  these  imitated 
beliefs  as  the  frivolous  part.  The  belief  of  the  money-market, 
which  is  mainly  composed  of  grave  people,  is  as  imitative  as  any 
belief.  You  will  find  one  day  every  one  enterprising,  enthusiastic, 
vigorous,  eager  to  buy,  and  eager  to  order  ;  in  a  week  or  so  you 
will  find  almost  the  whole  society  depressed,  anxious,  and  want- 
ing to  sell.  If  you  examine  the  reasons  for  the  activity,  or  for  the 
inactivity,  or  for  the  change,  you  will  hardly  be  able  to  trace  them 
at  all,  and  as  far  as  you  can  trace  them,  they  are  of  little  force. 
In  fact  these  opinions  are  not  formed  by  reason,  but  by  mimicry. 
Something  happened  that  looked  a  little  good,  on  which  eager, 
sanguine  men  talked  loudly,  and  common  people  caught  the  tone. 
A  little  while  after,  and  when  people  were  tired  of  talking  this, 
something  happened  looking  a  little  bad,  on  which  the  dismal, 
anxious  people  began,  and  all  the  rest  followed  their  words." 

There  could  be  no  more  complete  example  of  this  imitative 
habit  than  may  be  found  in  the  fluctuations  in  railway  construction, 
which  have  occurred  during  the  last  twenty  years  in  this  country. 

As  soon  as  the  war  ended  railway  construction  began  ;  it  was 
pressed  to  the  utmost ;  every  available  man  was  set  to  work. 
"Something  happened  that  looked  a  little  good."  Every  san- 
guine railway  promoter,  honest  or  dishonest,  "  talked  loudly,  and 
common  people  caught  the  tone."  Thus  it  went  on  until  187 1, 
when  over  400,000  men  were  employed  in  constructing  over  7,000 
miles  of  railway.  Then  something  happened  "looking  a  little 
bad,  on  which  dismal,  anxious  people  began  to  talk."  The  panic 
of  1873  occurred,  and  in  1875  railway  construction  had  gone 
down  to  1,700  miles,  giving  employment  to  less  than  100,000  men. 
Next  c'ame  the  long  struggle  to  resume  specie  payment,  and  in 
J 879  "something  (the  resumption  of  specie  payment)  happened 
extremely  good."     Every  one  became  "  enthusiastic,  enterprising. 


1 86  WHAT  MAKES 

vigorous,  eager  to  buy."  Railway  construction  was  resumed, 
factories  of  all  kinds  were  built,  exports  of  farm  products  in- 
creased, sales  were  easy  to  make,  consumption  followed  close  on 
the  heels  of  production.  But  there  were  many  blunders.  Use- 
less parallel  railways  were  promoted  and  built  alongside  of  an 
adequate  existing  service,  until,  in  1882,  650,000  men  were  en- 
gaged in  the  construction  of  11,500  miles,  while  over  450,000 
men  were  engaged  in  operating  existing  lines.  In  1882  one  man 
in  every  ten  of  all  who  were  occupied  in  any  kind  of  gainful  occu- 
pation aside  from  agriculture,  was  engaged  in  the  construction  or 
operation  of  a  railroad. 

"  Something  happened  a  little  bad."  Anxious  men  began  to 
question  the  pace  and  to  doubt  the  expediency  of  some  of  the 
work  ;  all  men  took  their  tone  ;  all  stocks  were  affected,  good 
and  bad  alike  ;  construction  fell  off  to  not  over  4,000  miles  in 
1884,  and  more  than  400,000  men  were  discharged  from  work  on 
this  single  occupation. 

There  were  real  causes  or  reasons  for  these  changes,  but  their 
effect  was  exaggerated  by  over-confidence  and  too  great  distrust. 

Almost  every  mile  of  the  apparently  excessive  railway  con- 
struction which  culminated  in  1872  has  justified  its  use,  if  not  its 
value  to  the  original  promoters,  as  almost  every  mile,  with  the 
exception  of  a  few  speculative  parallel  lines  of  the  apparently 
excessive  construction  culminating  in  1882,  will  yet  be  justified. 

We  now  have  125,000  miles  of  railway,  including  as  many  or 
more  through  lines  East  and  West,  as  can  be  profitably  used  for 
a  long  period,  but  the  cross-way  and  connecting  railroad  service  is 
totally  inadequate,  while  many  great  States  must  double  their 
mileage  within  a  very  few  years.  It  cannot  be  long  before  this 
need  will  be  felt;  "something  will  happen  that  looks  a  little 
good  "  ;  confidence  will  return,  and  the  ready  and  quick  con- 
sumption of  ou.r  excess  will  stop  all  talk  about  over-production. 

Again,  the  construction  of  textile  factories  has  wholly  ceased. 
Yet  if  the  construction  of  railways  and  other  works  were  going 
on  so  that  all  workmen  could  afford  to  buy  all  the  fabrics  they 


THE  RATE   OF  WAGES?  1 8/ 

need  for  themselves  and  their  families,  every  spindle  and  every 
loom  now  in  existence  would  be  needed.  Each  branch  of  work 
waits  upon  the  other  ;  one  stops  and  blocks  the  way  ;  then  an- 
other, then  another  ;  but  presently  the  "pig  goes  to  market,"  and 
the  whole  procession  moves  on. 

Each  reason  for  a  stop  or  a  start  is  exaggerated  by  hope  or  by 
fear  ;  few  have  the  instinct  to  foresee  these  tides  of  confidence 
and  of  distrust,  but  to  them  such  tides  lead  on  to  fortune. 

The  habit  of  expecting  greatly  beneficial  results  from  legisla- 
tive action,  or  the  reverse,  is  one  of  the  principal  causes  of  great 
fluctuations  in  the  course  of  affairs,  and  from  this  habit  of  exag- 
gerating the  assumed  power  of  legislative  action  in  business  mat- 
ters comes  the  check  to  constructive  enterprise  when  grave 
changes  in  legislation  are  pending. 

Such  changes  have  now  become  a  matter  of  necessity  and  not 
of  choice,  and  while  they  are  pending  every  man  waits  the  event 
and  dares  not  plan  for  future  enterprise. 

Yet  all  the  conditions  of  the  country  are  ripe  for  prosperity. 
There  is  enough  for  all,  and  work  is  waiting  to  be  done,  that  will 
soon  become  urgent,  which  would  entitle  every  idle  man  or  woman 
to  an  adequate  share  of  the  over-production  which  now  clogs  the 
centres  of  trade.  The  present  Congress  has  proved  itself  incapa- 
ble— it  blocks  the  way.  Before  the  next  assembles,  even  the 
doubt  which  now  causes  stagnation  may  have  yielded  to  the 
absolute  necessity  for  constructive  work  to  begin  anew. 

Whenever  the  new  start,  which  cannot  be  long  deferred,  is 
made,  the  vast  changes  of  twenty  years,  which  I  have  faintly 
tried  to  picture,  will  be  in  full  force,  and  the  struggle  for  general 
comfort  and  welfare  may  then  be  less  severe  than  it  ever  was 
before  in  this  or  any  other  land. 

It  has  seemed  to  the  writer  that  he  could  dimly  perceive  these 
beneficent  results  or  promises  amid  the  apparent  confusion  of 
the  statistics,  from  which  he  has  for  many  years  endeavored  to 
wrest  their  secret.  True  statistics  are  but  the  record  of  industrial 
history.     He  whose  imagination  cannot  read  what  is  written  be- 


1 88  WHAT  MAKES 

tween  their  lines  or  interwoven  in  their  columns,  may  rest  con- 
tent with  the  narrative  of  wars  and  dynasties,  or  of  political 
changes,  and  may  think  he  knows  the  true  record  of  events ;  but 
can  he  tell  how  the  people  lived  and  moved,  and  how  these  wars 
and  dynasties  have  been  sustained.  If  he  cannot,  let  him  study 
what  figures  can  teach  to  any  one  who  knows  how  to  master  them, 
to  wit  :  the  industrial  history  of  free  nations.  The  battle  is  not 
always  to  the  heaviest  battalions,  but  to  the  people  who  can 
sustain  the  battalions  longest.  It  is  the  commissary  general  who 
wins,  without  whom  the  master  of  the  ordnance  would  be  power- 
less. In  the  battle  of  life  it  is  the  same.  If  there  were  no 
prophecy  of  the  future  in  this  work,  these  computations  would  have 
no  meaning,  and  the  close  study  of  the  disclosures  of  the  census 
would  not  be  worth  the  time  devoted  to  them. 

I  have  ventured  to  call  this  a  treatise  upon  "  The  Mechanism 
and  the  Metaphysics  of  Exchange." 

The  second  term  of  this  title  may  be  most  fully  justified  by  a 
very  slight  consideration  of  the  fleeting  nature  of  capital  :  "  All 
things  have  been  others — all  things  will  be  others." 

The  term  "  fixed  capital  "  when  applied  even  to  the  most  solid 
and  substantial  industrial  works  is  yet  a  misnomer.  There  is  ab- 
f.olutely  nothing  in  the  shape  of  productive  capital  which  has 
any  long  duration  among  men. 

The  city  warehouses,  only  thirty  or  fifty  years  old,  fail  to  meet 
the  need  of  modern  commerce,  except  they  be  so  completely  re- 
constructed as  to  become  almost  wholly  new.  There  is  nothing 
left  of  the  factory  of  fifty  years  ago,  except  a  part  of  the  founda- 
tion and  the  wheel-pit  ;  and  in  that  fifty  years  the  whole  of  the 
machinery  has  been  changed  once,  twice,  or  thrice. 

The  modern  mechanic  would  scorn  the  tools  which  his  father 
used,  and  would  hardly  be  able  to  obtain  a  living  by  their  use. 

Of  all  the  work  which  has  been  done  by  men  to  promote  the 
exchange  of  services  and  the  distribution  of  products,  there  is 
nothing  permanent  except  the  opening  of  the  ways  and  the  body 
of  the  laws, 


THE  RATE   OF  WAGES?  1 89 

It  is  safe  to  say  that  in  one,  or  at  the  utmost  two,  generations 
every  productive  instrumentality  now  in  use,  except  the  opening 
of  the  ways,  will  be  almost  wholly  without  value  because  it  will 
have  been  supers^ed  by  better  mechanism  ;  therefore  no  treatise 
upon  existing  facts  would  be  worth  compiling  if  it  did  not  give 
the  greatest  prominence  to  the  metaphysical  side  of  social  science, 
and  did  not  bring  the  imagination  into  play  in  forecasting  the 
future. 

The  only  bequest  which  one  generation  can  give  to  the  next 
must  therefore  be  such  development  of  the  capacity  of  each  indi- 
vidual as  will  enable  him  to  grasp  the  opportunity  that  a  free 
government  may  assure  him,  to  work  out  his  own  material  welfare 
by  means  of  the  mechanism  which  may  be  in  use  during  the  term 
of  his  own  working  life. 

A  true  study  of  the  Mechanism  and  of  the  Metaphysics  of 
Exchange  therefore  is  a  true  study  of  the  History  of  Nations, 
and  when  a  commercial  history,  even  of  the  English-speaking 
people,  is  written  in  the  way  that  it  ought  to  be  written,  it  will 
give  us  an  insight  into  the  one  fact  more  important  than  all  the 
rest,  when  it  tells  us  how  the  masses  of  the  people  got  their  liv- 
ing—or, in  other  words  what  made  the  rate  of  their  wages — amid 
the  turmoil  of  wars,  the  contest  of  dynasties,  the  contention  of 
creeds,  and  the  struggle  of  the  masses  to  overcome  the  privileges 
of  the  few  when  they  had  ceased  to  be  founded  on  services  ren- 
dered to  the  many. 

For  such  a  work  as  this  might  be,  the  compiler  of  this  treatise 
can  only  prepare  some  of  the  materials  affecting  this  country. 

The  recent  publications  of  Prof.  J.  E.  Thorold  Rogers  on 
"  Work  and  Wages  "  for  the  last  six  hundred  years,  the  "  Growth  of 
English  Industry  and  Commerce  "  by  Prof.  W.  Cunningham,  and 
other  English  works,  together  with  the  investigations  of  Mr. 
Robert  Giffen,  cover  a  large  portion  of  this  ground  in  England. 

EDWARD   ATKINSON. 
Brooklin£,  Mass.,  Nov.  4,  1884. 


WHAT  IS  A  BANK? 

WHAT  SERVICE  DOES  A  BANK  PERFORM? 

LECTURE    GIVEN    BEFORE    THE    FINANCE    CLUB    OF    HARVARD    UNIVERSITY. 
MARCH,    1880 

By  EDWARD  ATKINSON 


Notice. — This  tract  is  specially  for  the  Active  and  Co5perattng  Mem- 
bers of  the  Society,  and  is  not  for  general  sale.  if  memoers  aesire  any 
additional  copies  they  will  be  furnished  in  any  quantity  at  the  rate  of  $10.00 
a  hundred,  on  applica<:ion  to  the  Secretary,  or  to  G.  P.  Putnam's  Sons,  of 
New  York,  or  Jansen,  McClurg  &  Co.,  of  Chicago,  111.,  the  publishing  agents 
of  the  Society. 

Respectfully, 

R.  L,  DUGDALE, 

Secretary » 


ZQ2 


BANKS  AND  BANKING. 

A    LECTURE  DELIVERED   BEFORE  THE  FIVANCE  CLUB  OF   HARVARD 
UNIVERSITY,    MARCH,    1880. 


Public  attention  is  very  much  devoted  to  the  question 
of  transportation.  The  importance  of  railroads  and  steam- 
ships is  apparent  to  all,  and  every  method  that  can  be  de- 
vised to  promote  the  extension  of  their  lines  of  traffic 
receives  attention.  From  the  dawn  of  history,  commerce 
has  been  the  measure  of  human  progress.  Upon  the 
ancient  caravan-routes  of  the  Far  East,  over  the  Roman 
roads  of  a  later  period,  across  unknown  seas,  and  by  devi- 
ous ways,  commerce  has  from  age  to  age  extended  its  be- 
neficent function.  Even  when  nations  have  attempted  to 
isolate  themselves,  by  enacting  excessive  duties  upon  im- 
ports, the  ''  fair  trader,"  as  the  smuggler  used  to  be  called, 
has  rendered  the  attempt  of  no  avail.  Men  will  exchange 
product  for  product,  because  there  is  no  other  way  by 
which  even  a  moderate  degree  of  material  welfare  can  be 
attained. 

But  in  this,  as  in  almost  all  branches  of  investigation,  he 
who  limits  his  thought  or  study  to  the  purely  physical  side 
of  the  question  will  be  misled. 

In  this  apparently  most  material  of  all  questions,  how  to 
subsist  the  human  body,  the  work  that  is  abstract  or  im- 
material is  of   such   essential   consequence   that  railways, 

193 


194  Banks  and  banjcing. 

steamships,  and  canals  would  be  shorn  of  more  than  one- 
half  their  beneficent  power  if  not  rightly  coordinated  and 
Ivorked  in  perfect  harmony  with  instruments  of  distribution 
fof  a  purely  abstract,  or  perhaps  we  might  say  metaphysical, 
order.  In  this  category  come  the  operations  of  the  bank 
and  the  banker. 

But  before  we  begin  the  discussion  of  the  function  of 
banks  and  bankers,  of  bills  of  exchange,  bank-notes,  and  all 
other  instruments  by  means  of  which  the  title  to  commod- 
ities is  passed  from  one  man  to  another,  while  the  things 
themselves  are  being  carried  over  the  railway,  it  becomes 
necessary  to  give  precision  to  our  language,  and  to  define 
the  meaning  of  the  words  that  we  must  use. 

I  am  satisfied  that  a  vast  deal  of  bad  legislation  would  be 
avoided  if  the  graduates  of  high  schools  and  colleges  had 
more  complete  command  of  the  English  language,  and  more 
fully  comprehended  the  exact  meanings  of  common  English 
words. 

Before  I  can  begin  to  consider  the  subject  of  banking,  it 
first  becomes  necessary  to  define  the  word  money.  I  shall 
assume  that  any  young  man  who  has  had  sufficient  intelli- 
gence to  pass  the  entrance  examinations  of  Harvard  Uni- 
versity will  know  enough  of  the  functions  of  money,  and  the 
qualities  which  it  must  possess  in  order  that  it  may  be  en- 
titled to  the  name,  to  warrant  me  in  excluding  stamped 
pieces  of  irredeemable  paper,  of  late  proposed  to  be  issued 
by  the  government  under  the  name  of  '*  fiat  money,"  from 
the  category  of  true  or  real  money. 

It  is  sometimes  necessary,  even  for  intelligent  men,  to 
consider  the  propositions  in  regard  to  what  is  called  "  fiat 
money,"  in  order  to  prevent  the  uninstructed  from  being 
cheated  by  knaves,  or  misled  by  those  whose  intelligence 
on  other  subjects  makes  one  hesitate  to  call  them  fools,  but 


BANKS  AND  BANKING.  IQS 

who  must  be  classed  among  persons  endowed  with  a  kind 
of  limited  or  perverted  intelligence,  for  which  the  dictionary 
has  not  yet  provided  a  suitable  name.  It  is  unfortunate 
that  there  should  be  even  a  few  men  among  us  whose  in- 
fluence has  been  established  in  the  conflict  with  the  slave 
power  through  which  we  have  lately  passed,  who  do  not 
perceive  the  baleful  character  of  the  measures  which  they 
advocate.  We  could  well  spare  them  if  they  would  mi- 
grate to  the  country  which  Boccaccio  describes  as  the 
"  Land  of  Mendacity,"  where  they  "  use  only  paper  money." 

For  the  purpose  of  this  lecture,  without  entering  upon 
the  history  of  money,  I  will  limit  the  meaning  of  the  word 
to  the  pieces  of  coined  gold  and  silver  used  by  most  nations, 
under  various  names.  Therefore,  for  the  present,  when  I 
use  the  word  *'  money,"  I  shall  mean  gold  or  silver  coins, — 
dollars,  sovereigns,  livres,  francs,  and  the  like.  True  money 
has  been  made  of  other  substances  in  past  ages,  but  at  the 
present  time  nothing  else  is  entitled  to  the  name. 

I  am  well  aware  that  this  limitation  would  not  be  admit- 
ted by  many  economists.  It  would  be  alleged  that  a  law  of 
the  land  makes  the  United  States  notes  now  in  use  "lawful 
money,"  as  well  as  "  legal  tender,"  and  that  we  must  there- 
fore accept  the  definition;  but  may  not  this  very  fact  be 
cited  as  an  example  of  the  danger  of  corrupting  the  lan- 
guage ? 

If  a  word  is  perverted  from  its  true  meaning,  it  ceases  to 
be  an  instrument  of  precise  thought. 

We  have  become  so  accustomed  to  the  perversion  of 
the  term  "  money  "  from  its  strict  application  to  the  coined 
substance  rightly  so  called,  and  its  application  to  the  prom- 
ises of  banks  known  as  bank-notes,  or  to  the  promises  of  the 
nation  known  as  legal-tender  notes,  as  to  make  it  difficult 
even  to  begin  to  speak  to  you  on  the  subject  of  banking* 


19^  BANKS  AND  BANKING. 

Another  great  and  very  mischievous  perversion  of  the 
word  "money"  is  to  use  it  as  synonymous  with  prop- 
erty. 

We  define  a  man's  property  by  saying  that  he  is 
worth  a  given  sum  of  money,  meaning  only  that  his 
property  would  be  measured  by,  or  could  be  sold  for, 
a  certain  sum. 

It  is  from  such  perversions  of  the  word  that  many  men 
have  been  led  to  believe  that  welfare  depends  upon  an 
abundance  of  money,  and  that  "  the  times,"  as  we  say,  are 
"  easy  "  or  '*  hard,"  just  in  proportion  to  the  abundance  or 
scarcity  of  money. 

What  is  intended  by  the  phrases  "  money  scarce "  and 
"  money  plenty,"  is  more  apt  to  be  "  capital  scarce  "  and 
"  capital  plenty  ;  "  but  there  are  also  hard  times  when  both 
money  and  capital  are  very  plenty,  and  the  real  cause  of 
adversity  is  that  **  confidence  is  scarce."  We  have  lately 
passed  through  such  a  period. 

One  most  potent  cause  of  want  of  confidence  is  when 
the  instrument  used  to  serve  as  money  is  not  true  money; 
irredeemable  notes  forced  into  use  by  an  act  of  legal  tender 
are  of  this  order.  The  more  abundant  such  base  or  forged 
money,  as  may  call  it,  becomes  the  less  it  serves  its 
purpose.  Depression,  adversity,  and  loss,  we  have  suf- 
fered in  full  measure  during  late  years.  Men  have 
talked,  with  the  wisdom  of  owls,  of  over-production, 
and  have  imputed  the  difficulty  under  which  great  masses 
suffered  in  recent  years  in  procuring  food,  fuel,  clothing,  and 
shelter,  to  the  alleged  fact  that  we  were  over-producing  corn 
and  meat,  that  our  mines  delivered  too  much  coal,  that  our 
looms  wove  too  many  yards  of  cloth,  and  that  too  many 
houses  existed.  Could  anything  be  more  absurd  ?  Surely 
nothing  except  the  proposed  remedy,  namely,  to  issue  yet 


BANKS  AND  BANKING,  I97 

more  of  the  very  kind  of  base  money  that  had  been,  all 
through  this  period,  the  most  malignant  cause  of  poverty, 
depression,  and  loss. 

Since  the  passage  of  the  legal-tender  acts  in  1862  and 
1863,  the  so-called  money  of  the  United  States  in  common 
use  has  been  bad  money.  It  is  still  bad,  though  in  lesser 
degree  ;  and  it  will  continue  to  be  bad  and  to  work  subtle 
mischief,  until  coin  only  shall  be  lawful  money  and  legal 
tender  for  debts  incurred. 

In  order  to  prove  these  dogmatic  propositions,  and  to 
make  the  use  of  money  and  the  function  of  banks  and 
banking  perfectly  clear,  we  must  analyze  the  simplest  trans- 
actions, then  proceed  from  the  simple  to  the  complex ;  and 
last  we  shall  see,  if  we  succeed  in  the  analysis,  that  the  met- 
aphysical instruments  of  exchange,  which  are  known  as 
bank-notes,  bank-deposiis,  bank-credits,  and  bank-exchanges 
or  clearances,  are  as  essential  to  the  quick  and  cheap  distri- 
bution of  corn,  beef,  pork,  and  cotton,  as  the  railroad,  the 
steamship,  the  butcher's  wagon,  or  the  baker's  cart.  It 
may,  I  trust,  become  very  plain  to  you  that,  unless  these  in- 
struments of  exchange  are  convertible  into  the  coin  which 
they  represent,  their  service  is  impaired  or  lost. 

If  we  analyze  the  simplest  exchange,  we  find  that  all 
transactions  are  of  the  nature  of  barter.  To  go  back  to 
school-boy  language,  all  trade,  from  the  transaction  in  the 
proverbial  jack-knife  to  Vanderbilt's  great  sale  of  twenty- 
five  million  dollars'  worth  of  railway-stock,  is  nothing  but 
"swapping."  Why  do  we  swap?  In  order  to  get  more 
than  we  give,  i.  e.,  something  of  more  use  to  us  than  what 
we  give  ;  here  begin  the  metaphysics.  The  exchange  oc- 
curs because  there  is  a  mental  conception  that  the  things 
bought  will  be  of  more  service  to  the  buyer  than  the  thing 
sold ;  hence  the  conception  of  value.     Each  person  buys 


19^  BANKS  AND  BANKING 

and  sells.  The  man  who  sells  corn  buys  money  ;  the  man 
who  buys  cloth  sells  money.  The  equation  may  be  formu- 
lated in  words  as  "  service  for  service,"  in  which  the  concep- 
tion of  price  arises  as  the  mean  of  the  equation.  The  dollar 
is  the  common  factor. 

When  the  mental  conception  of  service  is  applied  to  sub- 
stance, then  the  equation  takes  the  form  of  "  product  for 
product."  Carry  the  mental  conception  a  little  further  and 
we  at  once  perceive  that,  in  order  that  any  exchange  shall 
happen,  another  formula  must  be  conceived,  and  that  is 
"  effort  for  effort." 

We  may  use  these  words  rather  than  "  labor  for  labor,"  be- 
cause the  word  "  labor  "  has  become  limited  to  muscular  or 
bodily  work  upon  material  substances,  while  effort  includes 
that,  and  also,  in  addition,  the  mental  functions  or  efforts  that 
are  serviceable  to  others,  and  for  which  something  will  be 
given  in  exchange.  No  one  but  a  fool  sells  something  for 
nothing.  The  mistake  which  the  labor  reformers  make  is  in 
not  admitting  mental  effort  as  one  of  the  highest  forms  of 
service. 

The  process  which  must  occur  in  order  that  any  exchange, 
barter,  swap,  or  other  dealing  between  men  shall  happen, 
must  be  a  purely  mental  consideration  of  the  effort  exerted 
in  the  production  of  the  thing  parted  with,  and  the  effort 
saved  by  becoming  possessed  of  the  thing  obtained.  It 
may  be  unconscious  cerebration;  but  even  in  the  proverbial 
knife-trade,  each  boy  swaps  his  knife  because  he  thinks  he 
gets  a  better  knife  than  he  gives.  In  the  boy's  case 
there  is  usually  a  misconception  on  one  side  or  the 
other ;  but  in  the  great  commerce  or  swapping  of  the 
world,  whether  among  men  or  between  nations,  each  does 
obtain  that  which  is  more  serviceable  than  that  which  is 
parted  with,  or  else  the  traffic  ceases. 


BANKS  AND  BANKING.  I99 

In  the  last  analysis  all  commerce  is  an  exchange  of  re- 
productive forces. 

All  consumption  is  a  conversion  of  forces.  In  the  end 
it  is  a  chemical  reaction ;  and,  the  wider  the  distribu- 
tion, the  more  perfect  the  conversion.  All  this  is  element- 
ary, but  yet  necessary  to  the  further  treatment  cf  the 
subject. 

Exchange  is  necessary  to  the  subsistence  of  the  human 
race,  and  some  kind  of  money  is  necessary  to  facilitate  ex- 
change. 

The  point  most  commonly  overlooked  in  commerce  is 
that  two  and  two  make  five, — sometimes  six,  and  even 
more, — and  the  units  over  are  divided  sometimes  in  equal 
portions,  sometimes  unequal,  between  the  parties  to  the 
transaction.  The  force  of  the  grain  stacked  upon  the 
wheat-field,  and  of  the  cotton  on  the  plantation,  are  both 
passive.  Convert  them  in  the  factory,  and  an  active  force 
is  developed  which  serves  to  clothe  the  bodies  of  men. 
Two  measures  of  wheat  and  two  measures  of  cotton  make 
five  measures  of  cloth.  The  cotton  on  the  field  is  useless 
to  the  producer ;  the  wheat  may  rot  upon  the  prairie. 
Bring  them  together,  add  the  work  of  the  factory,  and  by 
their  conversion  the  new  force  is  developed  that  is  rneas- 
ured  by  a  higher  price  in  money  than  the  prices  of  all  the 
elements  of  which  this  new  force  consists.  You  will  ob- 
serve that  money  does  not  constitute  one  of  these  forces, 
or  one  of  the  elements  of  the  new  force.  It  is  only  an  in- 
strument used  in  their  conversion. 

Let  us  now  assume  that  the  nation  has  had  the  intelli- 
gence to  adopt  the  best  kind  of  money  yet  discovered, 
namely,  coined  gold,  as  its  standard  of  value  and  only 
legal  tender,  and  coined  gold  and  silver  as  its  instruments 
of  exchange  or  its  money. 


200  BANKS  AND  BANKING, 

Into  the  somewhat  abstruse  question  of  the  bi-metaHic 
theory,  and  the  ratio  of  gold  and  silver  to  each  other,  I 
do  not  propose  to  enter.  Let  us  assume  that  the  legal- 
tender  acts  whereby  United  States  notes  have  been  made 
lawful  money  and  legal  tender,  have  been  repealed  by  Con- 
gress or  annulled  by  the  Supreme  Court.  We  then  stand 
ready  to  begin  the  consideration  of  the  subject  of  banks 
and  their  relation  to  the  railroad  as  the  agents  of  ex- 
change. 

In  order  to  be  sure  of  our  ground,  we  must  begin  ah 
initio.  For  this  purpose,  we  will  consider  the  traffic  in 
black  pepper.  Pepper  is  produced  in  the  island  of  Su- 
matra. Down  to  a  comparatively  recent  period,  the  natives 
of  the  island  had  not  developed  wants  in  respect  to  the 
products  of  civilized  countries  to  a  sufficient  extent  to  bal- 
ance the  traffic  in  pepper  without  the  inclusion  of  a  consid- 
erable amount  of  money — I  mean,  of  course,  real  money — 
in  the  transaction.  And  here  you  will  observe  that  in  all 
international  trade  there  must  be  an  exact  balance.  No 
nation  can  sell  unless  it  buys,  or  buy  unless  it  sells:  and 
what  is  called  the  balance  of  trade  is  and  must  be  only  the 
balance  of  gold  or  silver  coin  that  is  bought  or  sold. 
These  coins  are  commodities,  products  of  labor,  of  pre- 
cisely the  same  kind  as  beef,  pork,  wheat,  corn,  and  cot- 
ton, and  subject  to  the  same  laws.  In  the  year  1879  ^^ 
bought  of  foreign  nations  about  eighty-four  million  dollars' 
worth  of  gold  in  the  form  of  coins ;  that  is  to  say,  we 
bought  English,  French,  and  American  coins  made  of  gold, 
weighing  a  certain  number  of  ounces,  of  which  weight  the 
stamps  on  the  coins  were  the  certificates.  A  true  state- 
ment of  our  foreign  traffic,  taking  for  the  moment  no  con- 
sideration of  credit  or  payment  deferred  on  either  side, 
would  be  that, 


BANKS  AND  BANKING,  201 

We  sold  so  many  bales  of  cotton, 

bushels  of  wheat, 

,  gallons  of  oil, 

pounds  of  meat. 

We  bought  so  many  yards  of  cloth, 

tons  of  sugar, 

bales  of  hemp, 

■  ounces  of  gold. 

Assuming  all  transactions  to  be  on  a  cash  basis,  there  can 
be  no  balance  of  trade.  The  exchange  is  an  exchange  of 
equivalents,  but  each  party  assumes,  and,  on  the  whole,  does 
make,  a  profit ;  that  is,  each  nation  parts  with  that  which  it 
could  not  use  with  as  much  advantage  to  itself  as  that  which 
it  receives.  There  is  an  exchange  of  forces,  but  in  this  ex- 
change two  and  two  make  five,  and  the  one  over  is  shared 
by  the  two  parties.  Sometimes  one  nation  makes  a  larger 
profit  than  the  other;  but  both  must  gain  something,  or 
else  the  trade  will  stop. 

Let  me  call  your  attention  to  one  point.  After  a  nation 
has  coin  enough  for  bank-reserves  and  for  use  as  pocket- 
money,  the  most  unprofitable  thing  it  can  import  is  more 
coin.  The  only  use  you  can  make  of  the  excess  of  coin  is 
to  send  it  out  of  the  country  again.  You  cannot  consume 
it.  All  other  goods  and  wares  you  can  convert  into  some 
other  useful  form,  but  gold  can  only  be  made  into  jewelry, 
and  silver  into  table-ware. 

When  there  is  no  balance  of  trade,  so  called,  that  is,  when 
our  cotton,  grain,  and  oil  are  equivalent  to  dry  goods,  sugar, 
and  spice,  then  the  conditions  are  very  sound  and  healthy. 
If,  on  the  other  hand,  we  sell  what  is  worth  a  million  to  us, 
and  in  exchange  appear  to  get  what  is  entered  at  the  cus- 
tom-house at  a  million  and  a  quarter,  then  we  may  be  bor- 
rowing the  excess.  Or  if  we  export  more  in  value  than  we 
import,  we   are  either  paying  our  debts  or  losing  by  the 


202  BANKS  AND  BANKING. 

traffic,  and  yet  this  last  state  of  the  account  is  commonly 
called  a  trade  that  "shows  a  favorable  balance."  The  coin 
we  imported  last  year  we  needed,  but  this  year  we  need 
iron,  salt,  sugar,  etc.,  and  the  import  of  coin  has  diminished. 
The  so-called  favorable  balance  has  diminished ;  our  de- 
mand for  these  things  is  giving  our  best  customers  for  our 
grain  and  meat  more  ability  to  buy;  they  can  pay  in  iron 
when  they  could  not  pay  in  gold ;  but  I  do  not  hear  any 
complaint  of  adversity  because  the  balance  of  trade  has 
changed.  We  bought  gold  when  we  needed  it,  and  paid 
with  cotton,  wheat,  and  oil ;  now  we  want  iron,  wool,  and 
tin,  and  we  are  buying  them  in  the  same  way. 

Let  us  return  to  the  pepper.  The  natives  of  Sumatra 
could  not  use  all  their  pepper;  there  was  an  over-production 
of  pepper  there ;  they  had  very  little  use  for  American 
goods,  but  they  could  use  good  money.  These  people, 
however,  wanted  a  particular  kind  of  money.  They  had 
learned  in  some  rude  way  that,  whatever  faults  the  Spanish 
nation  had  committed,  their  coined  dollars,  known  as  "  Car- 
olus "  or  "  Pillar"  dollars ,  always  contained  the  same 
amount  of  silver  :  therefore  these  dollars  they  would  take  ; 
they  would  swap  pepper  only  for  Pillar  dollars.  And  hence 
it  happened  that  the  American  merchant  could  only  get 
pepper  by  sending  his  ship  partly  loaded  with  goods,  and 
the  rest  in  ballast,  with  Pillar  dollars  for  the  balance  in  or- 
der to  buy  pepper.  How  the  pepper  traffic  is  now  carried 
on,  I  do  not  know;  this  was  the  way  when  I  was  a  boy. 
This  is  still  the  rule  in  respect  to  a  large  part  of  our  traffic 
with  China.  For  a  very  long  period  we  settled  our  balance 
of  trade,  so  called,  with  China  in  Mexican  dollars.  That  is, 
we  bought  silver  in  Mexico,  and  sold  it  in  China  by  the 
measure  of  the  dollar.  Here  is  another  curious  anomaly: 
Mexico  stands  as  the  example  of  all  misgovernment,  anar- 


BANKS  AND  BANKING,  203 

chy,  and  confusion,  but  Mexico  never  debased  her  coin. 
Is  there  not  hope  for  her?  We,  however,  at  length  ob- 
tained the  confidence  of  a  small  portion  of  the  Chinese,  so 
that  they  were  willing  to  take  our  trade  dollars,  and  now  we 
sell  China  a  good  deal  of  silver  in  that  form. 

You  will  observe  the  most  costly  method  of  commerce  in 
these  two  examples  :  special  kinds  of  coined  money  to  be 
gathered  up,  packed,  and  shipped  across  the  seas,  subject  to 
all  dangers  of  loss  by  Malay  pirates  but  a  little  while  ago, 
and  to  all  the  constant  dangers  of  storm  and  shipwreck  for 
all  time ;  the  ship  perhaps  making  a  voyage  half  around  the 
world  almost  empty  in  order  to  bring  home  the  pepper  or 
the  tea.  You  can  readily  see  how  limited  such  commerce 
must  be. 

Transfer  these  conditions  to  our  own  land  ;  suppose  that 
the  Louisiana  purchase  had  never  been  made,  and  that 
Iowa,  Nebraska,  Kansas,  and  all  that  vast  Mississippi  valley 
belonged  to  a  foreign  nation,  and  were  separated  from  New 
England  by  a  line  of  custom-houses  more  costly  and  diffi- 
cult to  pass  than  the  Hoosac  Mountain  or  the  ridges  of  the 
Alleghanies ;  assume  that  there  was  no  mutual  confidence, 
and  that  each  nation  watched  the  other  with  jealousy  and 
suspicion  from  behind  ramparts  guarded  by  five  hundred 
thousand  armed  men,  with  a  yet  greater  number  in  reserve, 
wasting  even  in  the  reserve  as  much  time  in  drill  with  rifle 
and  sabre  as  they  would  spend  in  work  at  the  plough,  the 
loom,  and  the  anvil.  When  you  have  assumed  these  con- 
ditions, you  have  only  made  a  comparison  with  what  are 
called  the  civilized  nations  of  Europe,  omitting  Russia  and 
Turkey ;  who,  with  only  four  times  our  population,  now 
stand  thus  facing  each  other  with  two  million  men  in  camp 
and  barracks,  a  larger  number  in  reserve,  bound  in  the  fet- 
ters of  sixteen  billion  dollars  of  na:ional  debts  secured  by 

ff^       OF  THF.     ^ 

((uiri7EE3IT7; 

\  /^  *        oar       ^  V 


204  BANKS  AND  BANKING 

mortgage  upon  a  territory  only  one-half  as  large  as  ours, 
omitting  Alaska.  Study  the  history  of  these  countries,  and 
you  will  find  that,  in  former  times,  commerce  could  only  be 
carried  on  between  them  by  the  actual  movement  of  the 
coin ;  and  that  most  of  their  wars  have  been  incurred,  and 
their  great  debts  imposed,  because  the  beneficent  function 
of  commerce  was  denied,  and  because  each  tried  to  gain  a 
special  advantage  over  the  other  without  rendering  a  service 
in  return. 

But  you  will  say :  These  obstacles  to  mutual  service  do 
not  exist  on  this  territory ;  what  have  they  to  do  with  bank- 
ing? I  only  refer  to  them  to  make  the  contrast  greater. 
Even  these  contests  of  race  and  differences  of  institutions 
and  language  would  not  restrict  the  exchange  of  corn  for 
cotton,  of  beef  for  iron,  of  wheat  for  fabrics  of  every  kind  ; 
would  not  be  as  great  obstacles  to  commerce  as  those  that 
are  removed  by  the  existence  and  use  of  banks,  and  by  the 
service  of  bills  of  exchange,  bank-notes  and  checks,  and 
bank  clearing-houses. 

Suppose  you  could  not  get  a  barrel  of  flour  from  the 
West  without  sending  out  a  five  or  ten-dollar  gold  coin  to 
pay  for  it,  and  then  you  begin  to  see  the  function  and  use 
of  banks  and  bankers. 

By  the  use  of  a  little  slip  of  paper  inscribed  with  a  few 
words,  signed  by  a  responsible  bank-officer,  the  title  to  one 
barrel  of  flour  passes  from  the  farmer  in  Nebraska  to  the 
mechanic  in  Massachusetts ;  while  the  title  passes  from  the 
mechanic  in  Massachusetts  to  the  farmer  in  Nebraska,  to  a 
certain  number  of  grains  of  gold  minted  into  coined  money 
in  the  works  of  the  government  at  Philadelphia. 

The  coin  may  be  all  the  time  kept  for  safety  in  the  vault 
of  the  Sub-Treasury  in  New  York,  and  the  barrel  of  flour 
may  be  stored  in  a  warehouse  in  Chicago  for  months  before 


BANKS  AND  BANKING,  20$ 

it  is  consumed  ;  but  the  title  is  passed  from  one  to  the 
other  by  the  assignment  of  the  little  strip  of  paper,  in- 
scribed, "  The  Merchants'  National  Bank  promises  to  pay 
to  the  bearer  five  dollars  on  demand,"  signed  by  the  presi- 
dent and  cashier ;  or  by  another  strip  of  paper  in  similar 
form  : — 

Merchants'  National  Bank. 

Pay  to  the  Iowa  farmer  five  dollars  on  demand. 

To  THE  Cashier.  (Signed)  JOHN  SMITH. 

This  is  an  epitome  of  all  transactions.  The  bank  is  the 
agent  for  assigning  and  transferring  titles  to  property :  that 
is  the  exact  function  of  the  bank  or  banker,  nothing  more 
and  nothing  less.  The  property  assigned  may  either  be  its 
own  capital  in  coin,  or  a  title  to  some  property  of  its  de- 
positors. A  part  of  its  capital  is  kept  in  reserve  in  the  form 
of  coin,  in  order  that  if  any  one  wants  actual  money, — true 
money,  coined  money, — it  may  always  have  enough  to  meet 
that  demand.  It  lends  the  rest  of  its  own  capital,  and  it 
acts  as  agent  to  transfer  titles  to  the  capital  of  others. 

If  these  functions  are  carefully  considered,  it  will  be  ob- 
served that  the  abundance  of  notes,  checks,  bank-deposits, 
bills  of  exchange,  and  other  instruments  of  credit  by  which 
titles  to  actual  property  are  passed  from  one  to  another, 
will  be  in  exact  ratio  to  the  quantity  of  capital,  that  is,  of 
commodities  or  property,  thus  being  moved  or  assigned  at 
any  given  time.  This  property,  these  commodities,  consti- 
tute what  is  called  the  quick  or  active  capital  of  the  com- 
munity, consisting  of  beef,  pork,  hay,  corn,  cotron,  dry 
goods,  tin-ware,  boots.  Bear  in  mind,  we  are  not  now  con- 
sidering savings  institutions,  also  called  banks,  that  deal 
more  in  titles  to  fixed  capital,  buildings,  works,  and  im- 
proved lands,  but  we  are  considering  the  functions  of  com- 


206  BANKS  AND  BANKING. 

mercial  banks  and  bankers  who  serve  the  purposes  of  mer- 
chants and  manufacturers. 

The  interest  which  is  paid,  and  which  constitutes  the 
profit  of  the  bank  or  banker,  is  paid  in  a  Hmited  degree 
only  for  the  use  of  money :  no  actual  money  has  passed ; 
the  money  is  substantially  all  in  the  bank-vault,  or  in  the 
vault  of  the  Sub-Treasury  ;  the  interest  is  paid  for  the  use 
of  the  property,  of  which  the  bank-note  or  credit  has  passed 
the  title  from  the  lender  to  the  borrower  by  the  measure  of 
money.  This  property  is  a  product  of  labor ;  interest  is 
therefore  paid  for  the  service  of  labor  already  done  in  the 
past,  in  order  to  enable  the  borrower  to  perform  more  work 
in  the  present. 

When  you  mortgage  a  house  to  a  savings  bank,  what  do 
you  borrow?  is  it  not  a  part  of  your  house?  You  are  a 
mechanic,  and  have  saved  five  hundred  days*  work  for  which 
you  have  a  thousand  dollars  in  gold  coin  ;  you  spend  that, 
but  you  want  more  house ;  you  borrow  a  title  to  another 
thousand  dollars,  and  buy  with  it  five  hundred  days*  work 
of  other  mechanics,  to  finish  your  house ;  and  you  owe  the 
sum  that  you  have  spent  until  you  can  work  it  out  your- 
self, but  you  have  really  borrowed  half  your  house. 

Prosperity  consists  in  the  rapid  consumption  of  the  goods 
and  wares  that  I  have  named,  meat,  flour,  pork,  iron,  cotton, 
and  the  like. 

When  the  money  in  use  is  good  money,  such  as  gold  coin, 
that  only  changes  its  value  in  relation  to  other  products  of 
labor  in  long  generations,  then  confidence  will  be  sufficient 
to  promote  the  quick  circulation  of  commodities,  and  then 
will  follow  the  consequence  so  often  mistaken  for  the  cause, 
— there  will  be  a  great  abundance  of  bank-bills,  bank-de- 
posits, and  bank-credits  ;  every  one  will  say,  "  Money  is 
very  plenty ;  "  but  the  real  fact  may  be  that  the  amount  of 


BANKS  AND  BANKING.  20/ 

real  money  held  in  reserve  to  meet  emergencies,  in  the 
vaults  of  the  banks,  and  the  Sub-Treasury,  may  not  have 
changed  a  single  dollar ;  but,  the  money  being  good,  pro- 
ductive and  constructive  enterprise  will  be  active  because! 
confidence  is  assured. 

In  such  periods  it  is  capital  that  is  plenty, — iron,  beef, 
cotton,  potatoes,  pepper  and  salt,  milk,  butter  and  cheese 
(the  annual  value  of  our  dairy  product  is  greater  than  that 
of  our  cotton),  and  we  work  cotton  into  cloth  in  order  to 
obtain  butter,  cheese,  eggs.  De  minimis  curat  economicus. 
When  capital  is  abundant  and  confidence  is  great,  the  new 
railroad  is  projected,  the  new  mill  is  constructed,  the  new 
house  is  planned,  and  we  spend  or  consume  the  products  of 
the  year  present,  in  order  to  be  able  to  provide  for  the 
wants  of  the  years  to  come.  We  convert  the  perishable 
forces  of  the  year  present,  that  would  otherwise  decay,  into 
the  more  permanent  forces, — into  railroads,  mills,  and  works 
that  will  assure  more  abundant  production  in  future  years. 

When  your  money  is  not  true,  that  is,  when  it  is  subject 
to  the  caprice  of  Congress,  people  live  from  hand  to  mouth, 
and  the  work  that  is  necessary  to  be  done  by  each  genera- 
tion to  prepare  for  the  increase  of  the  next  is  stopped,  be- 
cause the  money  that  may  be  received  in  the  future  may 
not  measure  the  effort  of  the  present.  For  several  years 
after  the  panic  of  1873  we  lived  as  if  never  another  mile  of 
railroad,  or  another  factory,  or  another  house,  would  be 
wanted ;  the  portion  of  the  population  usually  employed  in 
providing  for  future  need  was  reduced  to  idleness, — may  be 
five  in  a  hundred  ;  wages  were  depressed,  the  stock  of  goods 
piled  up,  and  wiseacres  talked  of  over-production ;  then  in 
the  next  breath  they  would  say  we  must  save,  and  not 
spend.  Why !  the  very  thing  needed  was  that  we  should 
spend  our  excess  of  iron  and  copper,  of  corn  and  pork  ; 


26S  BANKS  AND  BANKING. 

spend  them  in  new  work.  That  is  just  what  we  are  doing 
now.  Money  was  said  to  be  plenty  in  State  Street,  and 
would  not  bring  three  per  cent,  per  annum.  But  what  was 
this  money?  It  was  the  title  to  these  unspent  commodities 
that  no  one  had  confidence  enough  in  the  future  to  use  or 
spend,  because  the  measure  of  spending,  the  money,  was 
bad. 

On  the  1st  of  January,  1879,  "^^^  came  to  believe  that  the 
standard  of  value  had  become  fixed,  that  specie  payment 
was  resumed,  that  gold  coin  had  become  once  more  the 
money  of  the  nation.  Confidence  returned,  and  now  what 
do  we  see?  We  are  spending  again  in  useful  work  ;  we  are 
converting  iron  into  railroads  and  machinery;  brick  and 
timber  into  mills  and  works.  At  the  same  time  our  stock 
of  real  money,  held  in  reserve  in  gold  coin,  has  increased 
more  than  one  hundred  million  dollars. 

As  soon  as  we  began  to  use  good  money,  it  flowed  in 
upon  us.  We  have  ceased  to  hear  of  over-production,  yet 
the  products  of  1879  were  the  most  abundant  ever  known. 

It  is  our  mental  condition  only  that  has  changed.  Now 
that  good  money  is  even  partially  assured,  we  find  our  force 
is  doubled  ;  industry  is  resumed,  and  labor  is  well  employed, 
because  confidence  is  restored. 

In  order  that  we  may  more  readily  comprehend  how 
these  little  strips  of  paper  that  I  have  described — these 
checks  and  bank-notes — really  do  their  work,  let  me  use  a 
word  very  familiar  to  those  who,  like  myself,  have  been 
book-keepers,  the  word  *'  cash."  If  you  ask  me  now,  "  Have 
you  any  money  in  your  pocket  ?  "  and  I  followed  my  own 
rule,  I  should  confine  my  answer  to  the  coin  in  my  vest- 
pocket  ;  but  if  you  asked  me  if  I  had  any  "  cash,"  I  should 
also  include  the  bank-notes  in  my  pocket-book. 

In   book-keeper's   parlance,  "  cash  "    consists  of   checks, 


BANKS  AND  BANKING.  209 

bank-notes,  United  States  notes,  and  coin.  A  book-keeper 
never  says  his  money  is  short,  when  he  cannot  square  his 
account  ;  it  is  always,  "  My  cash  is  short." 

I  suppose  none  of  you  know  what  it  is  to  be  short  of 
cash  ;  if  you  do,  you  are  probably  not  very  particular  what 
word  designates  the  instrument  by  which  the  deficiency  is 
covered. 

The  cashier  used  to  be  the  guardian  or  keeper  of  the 
"  caisse,"  or  chest ;  he  was  the  chest-keeper,  in  which  coined 
money  was  kept  by  each  merchant  when  banks  were  few  or 
none.  Now  his  chest  has  disappeared,  and  he  keeps  a  cash- 
book,  in  which  titles  to  money  are  registered ;  and,  in  place 
of  coin,  he  balances  his  account  by  means  of  the  notes  and 
checks  by  which  the  titles  to  money  or  to  other  property 
measured  in  money  are  passed  from  man  to  man. 

How  do  we  use  this  "cash  "  as  a  substitute  for  money? 

The  other  day  I  wanted  some  smoked  venison-hams,  such 
as  are  brought  into  St.  Paul,  Minnesota,  from  Pembina, 
where  deer  and  Indians  abound.  I  knew  no  one  in  St.  Paul 
who  would  sell  me  hams  unless  he  had  *'  cash  "  in  hand. 
What  did  I  send  him?  Not  a  piece  of  gold  ;  that  would 
have  been  foolish,  although  I  had  three  ten-dollar  pieces  of 
gold  in  my  pocket,  that  I  had  drawn  from  a  banker,  in  re- 
compense for  a  lecture  given  to  this  club  last  winter  and 
afterward  published  in  an  English  review  ;  that  is  to  say,  T 
had  some  true  money — some  capital  in  gold  coin. 

I  took  that  money  to  a  bank,  and  obtained  a  cashier's 
check  on  a  bank  in  New  York.  I  parted  with  my  three 
coins,  and  obtained  a  title  to,  or  draft  for,  other  three  coins 
of  same  denomination ;  that  is,  containing  the  same  exact 
weight  of  gold.  I  sent  that  title  to  the  provision-dealer  in 
St.  Paul,  and  by  the  next  train  of  cars  came  back  the 
smoked  vension-hams,  cured  by  the  Indians  of  Pembina. 


2IO  BANKS  AND  BANKING. 

Money  might  have  been  said  to  be  plenty  in  St.  Paul,  to 
the  exact  amount  of  the  thiee  ten-dollar  gold  coins;  but 
the  coins  themselves  were  in  the  vault  of  the  bank  in 
Boston,  to  whose  cashier  I  paid  them  for  the  draft.  The 
Indian  had  brought  in  the  hams  to  the  shopkeeper  in  St. 
Paul,  and  had  exchanged  them  for  blankets,  gunpowder, 
bullets,  and  probably  some  whiskey,  for  which  the  shop- 
keeper owed  the  manufacturers  of  whom  he  had  bought  his 
stock.  In  this  transaction  you  have  an  epitome  of  all  com- 
merce :  the  shopkeeper  in  St.  Paul  received  the  title  from 
me  to  three  gold  coins, — not  the  money  itself, — and  sent 
me  hams;  he  swaps  ham  for  a  title  to  gold;  he  deposits 
that  title  to  gold  in  his  own  bank  in  St.  Paul,  with  other 
"cash"  received  for  goods;  then  he  draws  his  own  check 
on  that  bank,  and  pays  his  own  debt  for  blankets  and  gun- 
powder: and  so  the  title  passes  from  hand  to  hand,  and 
from  bank  to  bank,  until,  in  the  clearing-house  of  New 
York,  one  check  is  balanced  against  another,  and  a  little 
specie  or  real  money  passes  from  one  to  another  to  settle 
the  balance. 

My  small  mental  effort  procured  the  gold  for  me,  and  the 
Indian's  gun  procured  the  ham  for  him.  In  the  consumption 
of  the  ham  the  substance  of  my  brain  was  restored,  after 
the  effort  which  found  its  expression  in  the  English  review, 
so  as  to  enable  me  to  make  this  effort  to  explain  the  science 
of  banking  to  you  ;  while,  in  the  consumption  of  the  whis- 
key, the  Indian  obtained  a  gratification,  and,  in  the  use  of 
the  blanket  and  gunpowder,  he  was  fitted  out  for  another 
hunting  expedition. 

The  circulation  of  the  commodities  called  the  bank-check 
into  existence.  "  Cash  *'  was  plenty  in  St.  Paul  to  the  ex- 
tent of  that  check;  it  served  its  purpose  in  liquidating  other 
transactions ;  but  the  only  "  money  "  transactions  in  the 


BANKS  AND  BANKING,  2 1 1 

whole  sequence  was  the  movement  of  three  gold  coins  from 
the  vault  of  Kidder,  Peabody  &  Co.,  in  State  Street,  to  the 
vault  of  the  Eliot  National  Bank,  in  Devonshire  Street. 

How  did  the  coin  get  into  the  vault  of  Kidder,  Peabody 
&  Co.  ?  Perhaps  as  a  part  of  the  $84,000,000  sent  here 
from  England  in  1879,  ^^  exchange  for  Minnesota  flour, 
ground  in  the  mills  of  the  same  city  of  St.  Paul  ;  or  per- 
haps it  had  come  as  a  product  of  the  labor  of  the 
miner  in  California,  which  he  had  parted  with,  in  order  that 
he  might  purchase  the  cowhide  boots  of  East  Brookfield,  or 
the  heavy  woollen  blankets  made  in  some  Massachusetts 
factory. 

The  elements  of  banking  might  be  put  in  a  formula,  al- 
most in  a  scale.     They  consist  of : — 

A  little  gold  coin  or  true  money. 

An  unmeasured  amount  of  character,  prudence,  fore- 
thought, and  integrity,  in  the  banker. 

An  unlimited  amount  of  confidence  on  the  part  of  the 
community. 

The  scale  cannot  be  given  in  adequate  terms.  For  this 
country,  it  might  now  be  stated  something  like  this: — 

Three  hundred  million  dollars  of  gold  coin  suffices  as  the 
standard  by  which  to  measure  three  hundred  thousand  mil- 
lion dollars*  worth  of  purchases  and  sales  every  year. 

By  the  use  of  notes  issued  by,  or  checks  upon,  banks  and 
bankers,  more  than  100,000,000  tons  of  food  are  moved  in 
each  year  from  the  producer  to  the  consumer,  and  thus  the 
subsistence  of  50,000,000  people  is  assured. 

This  is  the  power  of  true  money  ;  this  is  the  money- 
power.  This  is  the  work  that  knaves  and  sentimentalists 
denounce,  obstruct,  and  retard.  This  is  the  measure  of  the 
integrity  of  men  ;  the  measure  of  the  trust  that  each  man 
reposes  in  his  neighbor ;  the  standing  testimony  that  total 


2 1 2  BANKS  A ND  BANKING, 

depravity  is  but  the  gloomy  dogma  of  the  shallow  thinker, 
whose  insight  into  the  great  work  of  the  world  is  but  the 
depth  of  his  own  little  mind. 

The  great  crops  of  this  country — grain  and  hay  only — 
weigh  ioo,ooo,ODO  tons;  they  constitute  food  for  man  and 
beast, — two  tons  to  be  moved  from  field  and  pasture  to 
subsist  each  man,  woman,  and  child ;  moved  not  once,  but 
twice  and  thrice.  The  grain  must  be  moved  from  field  to 
railway,  from  railway  to  mill,  from  mill  to  warehouse,  from 
warehouse  to  baker's  oven.  The  hay  and  roots  must  be 
moved  from  field  to  stable,  be  turned  into  butter,  cheese, 
and  meat,  be  exchanged  for  sugar,  tea,  coffee,  and  spices ; 
each  kind  must  be  distributed,  worked  over,  converted  from 
one  form  into  another,  and  at  last  consumed.  The  mind 
cannot  conceive  the  exchanges  that  take  place  each  and 
every  day. 

The  money  lies  safe  in  the  vaults  of  the  great  cities,  but 
the  little  slips  of  paper,  by  which  a  title  to  it  is  passed  from 
hand  to  hand,  serve  all  the  purpose,  provided  only  that  the 
money  is  good,  and  that  bank  officers  are  honest  and  pru- 
dent men.  There  is  no  better  measure  of  the  character  o.C 
a  nation  than  the  use  it  makes  of  banks. 

We  can  only  approximate  the  work  that  must  be  done  in 
order  that  each  of  you  may  subsist  a  single  year.  Two  tons 
of  grain  and  hay  to  each  one,  partly  used  directly  and 
partly  converted  into  meat:  each  of  you  eats  more  meat 
than  flour ;  then  come  the  milk,  the  sugar,  the  vegetables, 
the  coal  to  cook  the  food  and  warm  the  house.  All  this 
conversion  of  force  must  take  place  that  you  may  not 
starve, — not  less  than  three  tons  weight,  six  thousand 
pounds,  moved  at  least  three  times ;  first,  thousands  of 
miles,  then  hundreds,  and  at  last,  half  a  mile  as  to  each 
small  parcel.     This  work  must  be  done  every  year  for  every 


BANKS  AND  BANKING.  21 3 

one  of  you, — too  much  work  done  for  the  value  of  a  fresh- 
man, some  of  you  sophomores  may  think. 

All  this  dead  weight  must  be  moved  and  recombined, 
that  each  of  you  may  subsist ;  and  if  the  work  stopped  a 
single  year,  or  even  half  a  year,  the  world  would  be  depop- 
ulated. A  snow-storm  in  London  reduces  hundreds  to  the 
verge  of  starvation.  And  through  all  these  changes  the 
little  strip  of  redeemable  stamped  paper,  with  a  promise  to 
pay  upon  it,  and  signed  by  one  or  two  names, — the  book- 
keeper's "  cash", — has  been  a  sufficient  instrument  to  serve 
all  this  vast  and  complicated  traffic ;  the  bank-note,  the  bill 
of  exchange,  the  bank-deposit  certified  by  a  few  figures  in 
a  book,  with  a  little  coin  to  make  change  and  settle  bal- 
ances, has  measured  each  change  of  ownership,  and  has 
passed  the  title  of  all  this  property  from  man  to  man  ; 
while  the  railway,  the  steamship,  the  butcher's  cart,  and  the 
grocer's  wagon,  have  moved  the  property  itself.  There  is 
not  coin  enough  in  the  world  to  do  this  work  alone ;  but 
without  the  coin  to  serve  as  the  standard  by  which  to 
measure  and  guage  all  this  traffic,  it  would  mainly  cease. 
The  whole  mass  of  gold  in  the  world,  the  painful  accumu- 
lation of  centuries,  valued  and  sought  by  every  race  and 
every  nation  since  the  dawn  of  history,  would  not  fill  this 
hall.  The  one  product  of  labor  that  neither  moth  nor 
rust  can  corrupt,  that  neither  air  nor  water  will  oxidize, — 
who  can  tell  when  its  service  first  began,  or  how  it  came  to 
be  used  as  money  or  the  standard  of  value? 

Can  you  find  a  deeper  problem  in  metaphysics  than  the 
analysis  of  the  conception  of  value, — the  estimation  of 
gold, — the  twofold  process  of  the  mind  which  seems  so 
simple  when  we  buy  and  sell,  but  is  so  subtle  ?  If  you  can 
follow  the  course  of  the  little  slip  of  paper  stamped  with  a 
promise  to  pay  dollars,  as  it  passes  from  hand  to  hand,  and 


214  BANKS  AND  BANKING, 

carries  with  it  the  title  to  the  hundred  million  tons  of  food, 
until  each  daily  ration  reaches  the  mouth  that  is  to  con- 
sume it ;  if  you  perceive  that  as  each  ton  moves  by  rail  and 
river,  the  paper  slip,  the  book-keeper's  "  cash",  passes  by 
mail  and  hand  ;  if  you  can  see  that  the  volume  of  little 
slips  and  the  sum  of  the  figures  on  the  ledgers  of  the  mer- 
chants and  the  banks,  mark  as  many  dollars  of  promises  and 
credits  as  there  are  dollars'  worth  of  merchandise  movinsr 
from  producer  to  consumer, — then  you  will  have  mastered 
the  first  lesson  in  banking  ;  and  I  may  tell  you  perhaps, 
privately,  that  you  will  know  more  about  it  than  ninety- 
nine  bank-directors  in  every  hundred. 

If  you  will  try  the  experiment,  you  will  find  that  nearly 
every  practical  man  will  tell  you  that  banks  borrow  and 
lend  money,  and  will  be  amazed  at  your  audacity  if  you 
deny  it ;  but  at  the  ?ame  time  they  will  admit  that  neither 
a  bank-note  nor  a  bank-check  nor  a  bank-deposit  is  money. 

Does  not  this  speak  well  for  the  general  integrity  of 
men,  that  more  than  ninety-five  per  cent  of  all  the  transact 
tions  of  life — the  exchange  of  the  hundred  million  tons  of 
food  that  I  have  named  ;  the  conversion  of  this  force  into 
the  thousand  forms  that  make  up  the  necessities,  the  com» 
forts,  and  the  luxuries  of  life  ;  the  whole  trafftc  on  which 
the  subsistence  of  nations  depends — are  worked  by  means 
of  little  slips  of  paper  that  merely  carry  directions  from 
one  book-keeper  to  another  how  to  make  up  the  merchants' 
and  the  bankers'  accounts,  so  as  to  show  by  the  trial  bal 
ances  who  is  in  possession  of  the  property  exchanged,  oi 
who  is  consuming  it  at  any  given  time  ?  You  will  observe 
that  these  transactions  are  world-wide.  The  bill  of  ex- 
change that  passes  from  nation  to  nation  is  but  another 
slip  of  paper  by  means  of  which  a  title  is  passed.  Even 
yet  more  wonderful  is  the   telegraph.      It   almost   passes 


BANKS  AND  BANKING,  2 1 5 

comprehension  when  we  witness  its  work.  The  tea  mer- 
chant in  London  sends  one  message  to  China  ordering  tea, 
and  another  to  San  Francisco  for  silver,  and  before  the 
week  is  ended  both  substances  are  on  their  way  from  the 
producer  to  the  consumer.  Two  clerks  make  their  en- 
tries, two  letters  of  advice  are  written,  and  in  the  London 
banker's  office  the  transaction  is  settled.  1 

It  is  important  to  impress  upon  your  minds  that  banks 
and  bankers  transfer  titles  to  consumable  commodities 
from  producer  to  consumer;  and,  further,  that  in  the  con- 
sumption of  the  commodity  by  the  consumer  is  developed 
the  force  to  produce  some  other  thing  with  which  the  first 
producer  is  paid.  The  title  passes  by  a  written  or  printed 
slip  that  is  but  the  certificate  of  "  cash  "  in  the  book-keep- 
er's accounts.  Nearly  all  the  so-called  money  that  passes 
is  a  direction  from  one  clerk  to  another  how  to  make  an 
entry  on  his  ledger.  I  have  repeated  this  formula  many 
times,  and  have  tried  to  make  it  plain ;  it  is  the  essential 
idea  that  must  be  comprehended. 

It  follows  of  necessity,  if  the  system  of  banking  is  sound 
and  bankers  are  prudent,  the  sum  of  the  bank-notes,  bank- 
deposits,  and  other  forms  by  which  titles  are  transferred  to 
property  on  its  way  to  consumers,  can  never  exceed  the 
nominal  value  of  the  commodities :  hence  money  is  said  to 
be  plenty  or  otherwise,  when  the  quantity  of  commodities 
is  abundant  or  otherwise.  The  danger  to  banks  and  bank- 
ers comes  when  prices  have  been  carried  to  a  very  high 
point,  and  begin  to  decline  slowly  or  quickly  :  then  comes 
the  doubt  whether  the  men  who  have  borrowed  titles  to 
cotton  or  wool  or  other  merchandise,  through  the  inter- 
vention of  the  banks,  can  convert  these  materials  into 
cloth  or  the  like,  and  obtain  by  its  sale  a  title  to  as  much 
as  they  have  expended. 


2l6  BANKS  AND  BANKING, 

The  doubt  begins  with  cautious  men,  spreads  slowly  or 
quickly  ;  if  the  activity  has  been  very  great,  if  the  sub- 
stance borrowed  has  been  wasted  in  useless  mines,  or  spent 
in  constructing  railways  that  are  not  yet  wanted,  then  panic 
may  ensue  :  each  depositor  fears  his  title  will  be  passed  to 
some  one  who  will  not  use  it  wisely  ;  then  a  run  is  made 
upon  the  bank  to  convert  the  deposits  into  money,  and 
withdraw  gold  from  the  bank.  These  crises  come  usually 
for  good  reason  ;  they  are  the  process  of  cure,  not  the  dis- 
ease itself:  the  disease  has  been  the  wasteful  or  injudicious 
expenditure  of  the  substance  long  before  borrowed  ;  it  has 
been  the  imprudent  lending  of  titles  to  commodities  to 
those  who  in  consuming  the  commodities  have  not  repro- 
duced something  that  is  salable ;  who  have  spent  them 
without  results. 

Let  us  now  consider  the  work  of  a  national  bank. 

The  process  of  organizing  and  working  a  bank  is  very 
easily  comprehended  when  the  fundamental  idea  is  grasped, 
that  a  bank  lends  its  own  capital,  and  transfers  titles  to  the 
capital  or  property  of  its  depositors. 

A  portion  of  its  capital  it  must  always  keep  in  its  vaults 
in  coin,  as  a  reserve.  How  much  that  reserve  should  be, 
depends  upon  the  kind  of  business  done  by  the  bank;  and 
the  proportion  of  reserve  is  an  indication  of  the  prudence 
and  skill  of  the  manager. 

Let  us  assume  that  the  capital  of  a  bank  has  been  paid  in  by  its 

stockholders  in  gold  coin,  say $1,000,000 

The  bank  proposes  to  become  a  national  bank,  and  it  at  once  lends 
one-hdf  of  iis  coin  to  the  government  at  four  per  cent,  interest, 
for  which  it  receives  bonds 500,000 

It  has   left   in   coin 500,000 

On  the  deposit  of  the  bonds  as  collateral  security  for  the  notes  it 
may  issue,  the  government  ihen  authorizes  it  to  issue  national- 
bank  notes  for  the  sum  of 450,000 


BANKS  AND  BANKING,  21/ 

What  is  a  national-bank  note?  It  is  a  promise  of  the 
bank  to  pay  to  the  holder  a  certain  number  of  coined  dollars 
on  demand.  The  notes  of  the  bank,  when  in  its  own  posses- 
sion, are  therefore  unused  evidence  of  its  own  debt,  and  are 
of  no  effect  until  issued.  How  do  they  get  into  circula- 
tion ? 

A  manufacturer  who  has  made  ten  thousand  dollars'  worth 
of  cloth,  and  who  has  not  paid  for  the  wool  or  the  labor,  de- 
sires these  notes  to  use  for  the  purpose  of  such  payments. 
You  will  observe  that  they  are  promises  to  pay  coin,  and 
the  bank  has  in  reserve  half  a  million  of  coin.  These  notes 
are  therefore  transferable  titles  to  a  part  of  that  coin. 

The  manufacturer  has  sold  the  ten  thousand  dollars 
worth  of  cloth,  for  which  he  has  not  yet  paid,  to  a  job- 
ber,  for  eleven  thousand  dollars,  and  has  taken  his  note  at 
four  months  for  it.  The  jobber  has  the  cloth  ready  to  sell 
to  the  consumers  :  the  consumers  are  in  part  wool-growers 
and  mill-operatives.  The  note  is  a  title  to  the  equivalent 
of  the  cloth  in  coin  ;  the  sale  of  the  cloth  will  enable  the 
jobber  to  pay  the  note.  Therefore  the  note  of  the  jobber 
is  a  title  or  evidence  of  the  existence  of  so  much  cloth  on 
its  way  from  the  producer  to  the  consumer. 

The  manufacturer  takes  the  note,  due  in  four  months, 
to  the  bank,  to  be  discounted  ;  the  president  deducts  in- 
terest at  whatever  the  market  rate  may  be,  say  at  six  per 
cent,  or  two  per  cent,  for  four  months,  and  gives  the  cus- 
tomer $10,780,  in  its  own  bills  or  promises  to  pay  on  de- 
mand. In  that  discount  of  interest  is  the  profit  to  the 
bank ;  the  manufacturer  pays  for  the  wool  and  the  labor 
$10,000,  and  has  $780  left  in  bills.  He  now  wants  some 
foreign  wool,  for  which  he  must  pay  gold.  He  presents 
$780,  bank-bills,  and  draws  that  amount  from  the  bank's 
reserve  of  coin ;  the  rest  of  the  notes  circulate  from   hand 


2l8  BANKS  A,WD  BAXKING. 

to  hand  ;  some  of  the  farmers  and  operatives  who  received 
them  from  the  manufacturer  buy  goods  of  the  same  dealer 
who  purchased  the  cloth ;  by  the  time  his  note  is  due  he 
has  received  these  bills,  and  has  deposited  them  in  the 
same  bank  that  owns  his  note,  and,  when  the  note  is  due, 
draws  his  check,  and  thus  pays,  or  offsets  his  deposit-ac- 
count against  his  note. 

While  the  note  has  been  in  existence,  the  cloth  has  been 
in  use  ;  it  has  enabled  those  who  wore  it  to  do  more  work, 
to  reproduce  other  capital  to  take  its  place. 

All  through  the  transaction  the  gold  has  been  in  the 
bank,  ready  to  redeem  the  bank-note ;  the  cloth  has  been 
reproducing  capital,  to  assure  the  payment  of  the  mer- 
chant's note.  The  bank-note  and  the  merchant's  note  have 
divided  the  title  to  the  gold  and  the  cloth,  and  passed  it  to 
a  hundred  different  hands  ;  but  the  issue  and  redemption 
have  been  worked  to  the  convenience  and  profit  of  each 
and  all. 

Confidence  and  credit  and  a  few  slips  of  paper  have  re- 
moved the  need  of  weighing  out  gold  for  wool,  and  wool 
for  cloth,  and  cloth  for  labor.  The  title  has  been  passed, 
and  all  the  work  has  been  done,  because  men  can  trust  each 
other;  the  slips  of  paper  have  carried  the  title,  and  en- 
abled the  book-keepers  of  the  banks  and  merchants  to  keep 
their  record  of  credits  granted  and  obtained ;  and,  in  the 
clearing-house,  one  slip  written  off  against  another  squares 
the  account.  Coined  money  has  been  the  standard  ;  con- 
vertible paper  money  has  been  the  instrument ;  an  entry  in 
a  ledger  has  been  the  conclusion. 

In  order  that  the  conclusion  may  be  just  and  true,  the 
substance  to  which  the  title  has  been  passed  must  have  been 
rightly  spent ;  more  force  must  have  been  generated  than  has 
been  consumed.     The  difference  will  have  taken  the  con- 


BANKS  AND  BANKINC.  219 

Crete  form  of  a  new  and  useful  railway  or  mill,  a  better 
house,  a  college  gymnasium,  or  a  Boylston  Hall,  in  which 
students  may  be  making  preparation  for  more  effective  work 
in  the  future.  Thus  the  world  goes  on,  never  more  than 
one  year  removed  from  starvation,  yet  with  always  enough 
and  to  spare.  Whether  that  which  would  suffice  shall  be 
where  it  is  wanted,  or  not,  is  no  longer  a  question  of  phys- 
ical means  :  railroads  and  steamships  can  assure  distribution 
to  almost  every  part  of  the  world.  The  conditions  of  pros- 
perity are  now  peace,  order,  and  good-will  among  nations, 
good  money,  honest  and  prudent  bankers.  When  the  in- 
terdependence of  nations  is  admitted,  then,  and  only  then, 
will  commerce  forbid  war. 

I  have  stated  to  you  that  our  great  crops  of  grain  and 
hay  weigh  more  than  one  hundred  million  tons.  The  hay 
is  only  a  partial  measure  of  the  meat,  the  butter,  and  the 
cheese ;  the  roots  add  yet  more.  One  hundred  and  fifty 
million  tons  of  food  is  within  the  measure  of  what  we  con- 
sume ourselves,  or  send  abroad  to  exchange  for  goods  and 
wares  of  every  sort, — three  tons  to  each  man,  woman,  and 
child,  to  be  converted  into  power.  Food  is  fuel  for  the  hu- 
man engine.  "  Going  into  business,"  which  some  of  you 
may  contemplate,  means  a  share  in  the  conversion  or  dis- 
tribution of  this  force  of  three  hundred  thousand  million 
food-pounds. 

What  was  your  share  to-day?  About  sixteen  and  a-half 
pounds;  three  consumed  directly,  the  rest  indirectly.  Wit- 
ness the  power  of  money :  that  it  must  be  an  accurate 
measure  of  the  division  of  three  hundred  thousand  million 
food-pounds  into  daily  rations  of  three  pounds  each.  Leg- 
islators in  Washington  are  now  tampering  with  the  stand- 
ard of  value,  and  attempting  again  to  alter  the  measure  by 
which  all  this  vast  traffic  is  to  be  conducted. 


^20  BANKS  AND  BANKINC, 

You  may  see  how  little  we  are  governed, — how  much  we 
may  be  misgoverned, — when  you  attempt  to  conceive  of 
the  mischief  that  would  be  done  if  all  the  rules  by  which 
this  work  is  accomplished  needed  to  be  established  by 
statute.  Do  you  not  see  that  when  any  attempt  is  made  to 
extend  the  function  of  statutes  beyond  the  enforcement  of 
justice  and  the  collection  of  the  necessary  revenues,  with 
right  provision  for  education,  it  must  almost  of  necessity 
raise  barriers  between  men  and  nations  that  would  have  no 
existence  in  the  nature  of  things?  Honest  men  need  no 
statutes  for  the  conduct  of  their  business:  the  statute  in- 
tervenes only  when  some  one  tries  to  get  an  advantage 
over  another ;  in  other  words,  tries  to  obtain  more  service 
than  he  renders. 

One  by  one  all  sumptuary  laws  have  been  repealed,  or 
have  fallen  into  disuse,  because  trade  makes  its  own  laws. 
If  a  tarifT  for  taxation  is  assessed  at  rates  beyond  a  certain 
point,  the  smuggler  renders  it  inoperative.  Attempt  to  col- 
lect two  dollars  a  gallon  on  whiskey  again,  and  the  revenue 
on  it  would  almost  cease. 

Issue  fiat  money,  and  who  would  exert  himself  to  become 
possessed  of  it  ?  Only  the  man  who  believed  he  could 
cheat  his  neighbor  by  inducing  him  to  give  something  for 
it,  or  who  would  force  him  to  take  it,  under  the  operation 
of  a  legal-tender  act,  in  place  of  the  true  dollars  that  he  had 
promised.  Show  me  an  advocate  of  "  fiat  money,"  and,  in 
nine  cases  out  of  ten,  I  will  show  you  a  man  who  either  de- 
sires to  cheat  his  creditors,  to  grow  rich  by  causing  other 
men  to  become  poor,  or  to  live  without  work  on  the  prod- 
uct of  some  other  man's  labor. 

I  shall  now  be  obliged  to  lay  aside  my  strict  definition  of 
"  money,"  and  the  limitation  of  that  word  to  coin,  and  fall 
into  the  customary  way  of  treating  convertible  bank-notes 


BANKS  AND  BANKING.  221 

and  legal  tender  notes  as  money,  or,  in  common  speech,  as 
"  paper  money  ;  "  better  designations  are,  in  respect  to  coin, 
"  real  money,"  and  in  respect  to  convertible  paper,  *'  repre- 
sentative money." 

Notes  serve  the  purpose  often  given  as  descriptive  of 
money;  they  are  instruments  of  exchange;  and  it  would 
be  almost  a  Quixotic  attempt  to  strive  now  to  change  their 
common  designation.  We  will  call  both  classes  of  notes, 
"  money,"  in  order  that  1  may  more  fully  explain  why  one  is 
good  paper  money  and  the  other  bad  paper  money.  Both 
are  promises  of  coined  dollars  on  demand,  but  the  redeem- 
able bank-note  is  the  symbol  or  measure  of  the  cloth,  meat, 
corn,  cotton,  or  some  other  substance,  on  its  way  from  pro- 
ducer to  consumer.  It  can  only  get  into  circulation,  as  I 
have  attempted  to  explain,  as  a  representative  title,  or  evi- 
dence of  substance,  in  the  consumption  of  which  will  be 
given  the  power  to  redeem  the  note. 

The  legal-tender  United  States  note,  on  the  other  hand, 
is  the  symbol  or  evidence  that  the  government  forced  its 
citizens  to  lend  it  food  and  munitions  of  war  fifteen  to  twenty 
years  since,  all  of  which  were  consumed  without  reproduc- 
tion ;  it  is  evidence  of  capital  destroyed,  and  of  debt  due 
and  unpaid.  Its  convertibility  into  coin  depends  on  the 
power  of  taxation.  It  has  not  the  first  attribute  of  gooc* 
paper  money,  except  so  far  as  coin  is  held  in  reserve  for  its 
payment;  nor  has  the  government  any  immediate  means  of 
payment,  if  any  sudden  distrust  should  cause  the  notes  to 
be  presented  beyond  the  sum  of  its  reserve  in  coin.  Id 
banking,  the  proportion  of  reserve  can  be  determined  by 
the  nature  of  the  business  done,  the  condition  of  the  crops, 
the  state  of  the  foreign  exchange,  and  many  other  indica- 
tions, a  knowledge  of  which  constitutes  the  skill  of  the 
banker ;  but  the  safe  measure  of  reserve  for  a  government 


222  BANKS  AND  BANKING, 

note  can  never  be  less  than  dollar  for  dollar  in  coin,  and, 
when  that  standard  is  established,  the  issue  of  the  notes 
yields  no  profit  or  saving  of  interest. 

In  conclusion,  let  me  indicate  one  other  advantage  which 
a  national-bank  note  possesses  over  the  notes  of  the  State 
banks,  formerly  used.  The  State-bank  notes  depended  en- 
tirely on  the  skill  and  judgment  of  the  bank  managers: 
when  a  bank  failed,  the  holders  of  the  bank-notes  had  a 
lesson  in  the  meaning  of  words;  they  found  out  to  their 
cost  that  notes  might  cease  to  be  money,  either  in  fact  or  in 
semblance. 

.   State  banks  often  failed  to  pay  their  notes  as  well  as 
their  deposits. 

The  national-bank  note,  or  promise  of  the  bank,  cannot 
be  issued  unless  the  bank  has  first  lent  a  part  of  its  capital 
to  the  government,  for  which  the  government  pays  inter- 
est, and  in  evidence  of  which  it  has  issued  bonds.  These 
bonds  are  deposited  as  security  for  the  payment  of  the 
notes.  The  bank  may  fail,  it  may  defraud  all  its  depositors 
of  every  dollar  of  the  title  to  capital  which  they  have  de- 
posited with  it,  but  it  cannot  defraud  the  holder  of  a  note; 
if  the  bank  does  not  redeem  the  note  at  its  own  counter, 
the  holder  can  present  it  to  the  controller  of  the  banks,  cause 
the  bonds  deposited  as  security  to  be  sold  for  coin,  and  draw 
the  coin.  The  bank-note  is  secured  first  by  all  the  other  capi- 
tal and  profits  of  the  bank  not  lent  to  the  government,  by  all 
the  commodities  in  title  to  which  it  was  first  issued  by  the 
bank  and  obtained  circulation  in  the  community,  and,  sec- 
ond, by  the  collateral  security  of  United  States  bonds  bear- 
ing interest. 

The  United  States  note  depends  upon  the  power  of  fu- 
ture taxation,  and  is  at  the  caprice  of  Congress,  into  which 
such  men  as  B.  F.  Butler  have  more  than  once  found  an 


BANKS  AND  BANKING.  223 

entrance  by  the  votes  of  their  dupes  and  their  confederates 
in  Massachusetts  and  elsewhere.  It  does  not  represent 
property  in  existence,  but  substance  that  has  been  de- 
stroyed. 

Which  of  these  notes  best  meets  the  conditions  of 
safety  ? 

May  it  not  be  affirmed  that  the  national-bank  note  leaves 
nothing  to  be  desired,  if  paper  money  convertible  into  coin 
is  to  be  used  at  all  ?  It  is  secured  beyond  a  reasonable 
doubt,  and  as  it  has  the  semblance  of  true  money  to  masses 
of  people  who  cannot  appreciate  the  distinction  between 
real  money  and  its  promise,  it  is  eminently  right  that  the 
government  should  protect  the  holders  of  the  notes,  and 
assure  their  absolute  convertibility  on  demand  by  requiring 
the  deposit  of  the  United  States  bonds  as  collateral  security 
for  the  notes. 

We  have,  indeed,  brought  United  States  notes  to  par  in 
gold  coin,  and  for  the  moment  he  who  presents  them  for 
payment  will  receive  the  coin ;  but  if  the  preceding  state- 
ment of  the  function  of  banks  and  of  bank-notes  has  any 
foundation  in  principle,  the  attempt  of  a  government  to  as- 
sume the  functions  of  a  bank  of  issue  is  an  economic  ab- 
surdity fraught  with  the  gravest  dangers. 

The  question  is  not  yet  determined,  but  is  still  at  issue, 
whether  the  money  of  the  nation  shall  be  good  or  bad  for 
the  next  few  years. 

The  lawful  money  is  novj  good  money  in  gold  coin,  and 
bad  money,  or  United  States  notes  first  issued  for  the  pur- 
pose of  collecting  a  forced  loan,  and  made  a  legal  tender 
for  that  purpose  only. 

During  the  war  these  notes  depreciated  to  less  than  forty, 
per  cent,  of  their  nominal  value ;  they  are  now  at  par,  and 
are  nominally  redeemed  in  coin  ;  but  although  the  lawful- 


224  BANKS  AND  BANKING. 

ness  of  their  reissue  is  contested  by  the  ablest  lawyers  and 
the  members  of  the  Senate  and  House  of  Representatives 
most  competent  to  decide  the  question,  they  are  being  re- 
issued even  while  the  validity  of  the  acts  under  which  the 
reissue  takes  effect  is  before  the  Supreme  Court  for  adjudi- 
cation, it  being  a  question  not  yet  decided.  Their  reissue 
is  not  confined  to  the  purposes  for  which  the  executive 
might  feel  obliged  to  use  them  under  existing  laws,  but 
they  are  being  forced  into  use  again  in  the  purchase  of 
bonds  not  yet  due,  for  the  sinking  fund,  without  reason  or 
necessity. 

This  course  is  but  a  repetition  of  the  disastrous  policy 
followed  under  the  administration  of  the  Treasury  Depart- 
ment by  most  of  the  predecessors  of  the  present  secretary 
ever  since  the  office  was  held  by  Hugh  McCuUoch.  When 
these  notes  which  have  been  paid  in  coin  are  reissued  in 
exchange  for  bonds,  such  notes  being  legal  tender  until 
otherwise  decided  by  the  Supreme  Court,  and  therefore 
competent  under  existing  laws  to  constitute  a  portion  of 
the  bank  reserves  in  place  of  coin, — they,  in  fact,  constitute 
an  element  of  the  currency  not  called  into  use  by  the  opera- 
tion of  the  laws  of  trade. 

They  are  therefore  forced  into  use  where  they  are  not  re- 
quired, and  may  at  any  time  work  the  same  effect  that  they 
did  before,  to  wit :  inflate  prices,  and  presently  cause  the 
export  of  the  gold  coin  which  will  be  displaced  by  them. 
Next  may  follow  their  depreciation,  and  possibly  another 
suspension  of  coin  redemption  by  the  treasury  of  the  United 
States ;  or  what  would  be  a  yet  greater  misfortune,  re- 
demption in  depreciated  silver  coin. 

The  first  steps  in  this  vicious  sequence  are  now  apparent, 
and  the  malignant  effects  of  the  attempt  of  the  Treasuiy 
Department  to  do  the  work  of  a  bank  of  issue,  for  which  it 


}5ANKS  AND  BANKING.  22$ 

is  radically  unfit,  are  now  to  be  as  plainly  seen  as  they  have 
been  many  times  before. 

Speculation  waits  upon  the  decision  of  the  Secretary  of 
the  Treasury  as  to  how  much  bad  money  he  will  inject  into 
the  currency  in  each  week ;  and  the  eaves-droppers  of  the 
lobby  listen  for  the  corrupt  whispers  that  shall  enable  them 
or  their  confederates  to  plunder  the  victims  of  a  false 
monetary  system 

The  prices  of  the  necessaries  of  life  have  been  subject  to 
great  fluctuations,  as  they  have  before  when  the  currency 
was  tampered  with.  In  1879,  they  rose  faster  than  the 
wages  of  those  who  did  the  work  of  producing  them,  and 
strikes  prevailed  everywhere  ;  the  unwary  were  again  misled 
by  the  specious  representations  of  those  who  live  upon  the 
credulity  of  their  dupes,  and  the  thousand  evils  of  tamper- 
ing with  the  money  of  the  country  became  patent  to  those 
who  look  beneath  the  surface.  Mining  stocks  were  sold  at 
such  prices  that  if  the  product  of  the  mines  would  pay  a 
dividend  on  the  nominal  sums  given,  silver  would  be  depre- 
ciated at  least  one-half  from  its  present  ratio  to  gold ;  any 
thing  that  was  called  a  railroad  served  the  purpose  of  the 
stock-jobber,  and  many  of  the  other  symptoms  became 
visible  which  constitute  the  disease  of  which  a  commercial 
crisis  is  the  usual  process  of  cure. 

These  are  the  symptoms  of  a  false  element  in  the  finances 
of  the  country ;  of  bad  money  again  displacing  that  which 
is  good. 

Whether  an  inflation  caused  by  the  use  of  government 
Vgal-tender  notes  nominally  redeemable  in  specie,  and  not 
cancelled  when  thus  redeemed  or  paid,  but  reissued,  will 
tvork  as  great  a  disaster  as  the  inflation  caused  by  the  forced 
circulation  of  the  same  notes  when  irredeemable,  is  one  of 
the  problems  not  yet  determined. 


226  BANKS  AND  BANKING. 

The  enormous  crops  of  the  past  few  years,  and  the  possi- 
bility of  moving  them  which  the  railroad  and  the  steamship 
have  given  us,  have  enabled  the  Treasury  Department  to 
meet  the  conditions  of  the  resumption  act,  and  to  stand  ready 
thus  far  to  redeem  the  notes  in  gold  coin  when  presented. 
A  true  statesman  would  be  able  even  now,  to  assure  the 
stability  of  coin  payments  for  all  time  to  come;  but,  to  the 
shame  of  our  intelligence  as  a  people,  it  is  yet  a  question 
whether  another  financial  disaster  may  not  be  needed,  be- 
fore the  simple  principle  of  finance  is  learned,  to  pay  your 
debt  due  on  demand  first  and  finally,  rather  than  to  reissue 
your  own  evidences  of  debt  due  on  demand,  and  force  them 
into  circulation  as  lawful  money  in  the  purchase  of  long 
bonds  not  matured. 

If  we  are  saved  from  another  disaster  which  may  come 
because  of  the  want  of  capacity  on  the  part  of  those  who 
assume  to  govern  and  control  the  finances  of  the  country  to 
comprehend,  or  their  unwillingness  to  accept,  the  simple 
principles  that  underlie  the  question,  it  will  be  from  the 
same  causes  that  have  brought  us  into  our  present  favor- 
able condition  in  spite  of  previous  mismanagement. 

The  enormous  productive  capacity  of  the  country  and  the 
energies  of  the  people,  aided  by  the  railway  system,  have 
enabled  us  to  surmount  financial  incapacity,  under  previous 
administrations,  equalled  only  by  that  charged  on  the 
Tory  administration  of  Great  Britain  by  the  great  leaders 
of  the  Liberal  party. 

Full  credit  may  be  given  to  the  present  Secretary  of  the 
Treasury  for  executive  ability  and  administrative  power. 
The  conduct  of  affairs  has  been  admirable  during  the  period 
when  the  circumstances  of  the  time — our  great  harvest,  and 
the  bad  crops  in  Europe — gave  us,  for  the  time,  the  control 
of  the  gold  of  the  world. 


BANKS  AND  BANKING,  22; 

But  the  point  of  danger  is  near  or  is  already  reached ;  the 
test  of  statesmanship  is  now  being  applied.  Circumstances 
may  again  save  us,  but  the  reissue  of  notes  already  paid, 
after  the  disastrous  experience  of  years  past,  caused  by  the 
same  vicious  policy,  may  fully  warrant  those  who  resisted 
that  policy  then,  and  foretold  its  malignant  result,  in  again 
sounding  a  note  of  warning. 

The  danger  of  a  debt  currency  must  exist  so  long  as  the 
promise  of  coin  is  forced  into  use  by  an  act  of  legal  tender. 
Such  a  currency  may  for  a  time  be  redeemable,  but  it  con- 
stantly tends  to  become  irredeemable. 

We  have  been  saved  from  inflation  and  an  increased  issue 
of  irredeemable  paper  money  only  by  the  veto  of  a  Presi- 
dent, the  policy  of  whose  financial  secretary  had  led  logi- 
cally and  directly  to  the  vicious  legislation  which  was 
stopped  by  his  veto. 

Great  Britain  has  its  land  question,  we  have  the  money 
question  to  be  determined  ;  both  appalling  in  the  conse- 
quences that  may  ensue  from  a  false  policy. 

May  not  the  record  of  history  in  both  cases  be  the  same, 
— that  the  principles  of  liberty  and  the  sentiment  of  per- 
sonal independence  are  so  fully  ingrained  in  the  English 
race  as  to  enable  both  branches  to  surmount  the  obstacles 
which  their  own  legislators  have  placed  in  the  way  of  their 
progress  ? 

Whether  the  money  be  good  or  bad,  whether  the  land  be 
free  or  restricted,  whether  vested  wrongs  be  sustained  for  a 
time,  or  vested  rights  promoted, — the  sentiment  of  personal 
independence  and  individual  liberty  may  be  depended  upon 
as  the  great  safeguards  of  the  English  race,  and  will  ulti- 
mately assure  righteous  laws. 

In  the  first  lecture  which  I  gave  you  this  year,  I  en- 
deavored to  picture  to  you  the  beneficent  function  of  the 


228  BANKS  AND  BANKING. 

railroad  and  the  steamship,  in  assuring  a  good  subsistence 
to  the  people  of  many  lands  and  far-distant  places. 

In  this  I  have  treated  the  more  abstract  method  by  which 
distribution  is  promoted. 

In  the  merely  material  work  of  the  railroad,  skill  and  in- 
telligence only  may  suf^ce,  but  the  conduct  of  the  bank 
calls  also  for  character  and  integrity  of  the  highest  order. 
In  the  history  of  commerce  the  great  banker  may,  perhaps, 
stand  first  among  those  who  have  guided  the  great  ex- 
changes of  the  world,  and  who  have  made  civilization  pos- 
sible. 

EDWARD  ATKINSON. 

Brookune,  Mass.,  March,  i(8o 


THE  RAILWAY,  THE  FARMER, 
AND  THE    PUBLIC 


By  EDWARD   ATKINSON 


[Reprinted  from  the  Manufacturers*  Gazette  of  Saturday,  August  9,  1884J 


829 


THE  RAILWAY,  THE  FARMER,  AND  THE 

PUBLIC.  ^ 


I. 

The  present  condition  of  business,  which  may  be  called  a 
partial  commercial  paralysis  rather  than  an  acute  commercial 
crisis,  the  reduction  in  the  prices  of  some  of  the  most  necessary 
articles  of  clothing  and  of  food  since  1882,  the  actual  acute 
crisis  in  the  stock-market,  and  the  enormous  reduction  in  the 
prices  of  railway  securities,  all  alike  point  to  subtle  and  power- 
ful causes  of  change,  perhaps  of  a  permanent  character,  which 
cannot  be  explained  by  any  superficial  consideration  of 
"  corners,"  so  called,  or  of  the  work  of  "  bulls  and  bears," 
either  in  produce  or  in  railway  stocks  or  bonds.  It  is  prob- 
ably beyond  the  power  of  any  investigator  to  make  a  com- 
plete analysis  of  all  the  forces  which  have  produced  these 
results.  The  utmost  which  can  be  done  is  to  give  a  direction 
to  thought  and  observation,  leaving  to  the  future  to  disclose 
the  actual  facts  in  all  their  bearings. 

In  pursuance  of  this  great  subject,  let  us  first  consider 
some  of  the  most  potent  causes  of  permanent  change  in 
respect  to  the  production  and  distribution  of  the  necessary 
articles  pertaining  to  the  subsistence  of  the  people,  which 
have  occurred  since  the  end  of  the  war.  Food,  clothing,  and 
shelter  are  the  subjects  of  primary  consideration.  Fuel  is 
secondary  in  its  application  to  household  economy,  but  is  of 
the  first  importance  in  the  production  of  metals.  With 
respect  to  food :  Prior  to  the  invention  of  the  railroad  and 

231 


232  THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC. 

for  a  long  period  afterward — or  until  the  railway  service  of 
the  United  States  became  finally  and  fully  connected,  East 
and  West,  which  was  about  the  year  1861, — the  greater  part, 
of  the  substantial  food  of  each  community  was  of  necessity 
produced  within  a  short  distance  of  each  town,  city,  or  popu- 
lous centre,  owing  to  the  necessary  cost  of  distributing  corn, 
meat,  and  dairy  products  in  bulk  by  wagons.  Under  these 
conditions  the  best  land  in  each  State,  or  even  in  the  sepa-. 
rate  sections  of  each  State,  near  towns  or  cities,  was  of  neces- 
sity devoted  to  the  production  of  the  coarser  staples,  /.  ^., 
Indian  corn,  hay,  meat,  potatoes,  and  the  like.  The  central 
parts  of  New  York  State  and  many  parts  of  Pennsylvania 
were  the  sources  of  the  greater  part  of  the  supply  of  wheat, 
but  Western  corn  was  unknown  in  Eastern  markets.  As 
distribution  became  less  costly,  especially  after  the  final  con- 
solidation of  the  railway  service  in  1869,  those  coarser  and 
more  bulky  products  of  agriculture  became  in  a  sense  border 
or  pioneer  crops,  and  much  land  which  had  previously  been 
devoted  to  their  production  in  the  East  was  now  released 
and  became  used  for  market  gardens,  small  fruits,  and  for 
other  purposes.  Central  New  York  still  produces  as  much 
wheat  as  ever,  but  a  vast  addition  has  been  made  of  other 
salable  crops,  and  agriculture  is  much  more  profitable  than 
when  wheat  was  the  principal  salable  or  money  crop.  The 
j final  consolidation  of  great  railway  systems  took  effect  after 
the  war,  about  the  years  1S69  and  1870,  and  in  a  treatise 
entitled  "  The  Railway  and  the  Farmer,"  published  by  the 
writer  in  1881,  he  pictured  in  the  graphical  method  the 
coincidence  in  the  increase  of  the  great  grain  crops  of  the 
country  with  the  extension  of  the  railway  mileage.  This 
coincident  increase  went  on  from  1865  to  1S80,  from  over 
1,100,000,000  to  over  2,400,000,000  bushels,  culminating  in 
that  year  in  the  production  of  the  largest  grain  crop  ever  be- 
fore raised  in  the  United  States,  and  scarcely  exceeded  since. 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.  233 

Throughout  this  period  there  was  a  constant  reduction  in 
the  charge  for  railway  service,  accompanied  by  a  vast  increase 
in  the  quantity  of  grain  and  other  produce  moved  ;  but,  meas- 
uring the  prices  by  the  gold  standard,  there  was  no  substantial 
decrease  in  the  price  in  the  East  of  the  principal  farm  pro- 
ducts of  the  West.  These  facts  will  duly  appear  by  the 
consideration  of  the  graphical  tables  and  the  figures  sub- 
mitted herewith.  Attention  is  especially  called  to  the 
changes  which  occurred  from  1869  to  1880  inclusive.  It  will 
be  remembered  that  the  year  1880,  following  the  resumption 
of  specie  payments,  was  a  year  of  great  prosperity  in  every 
branch  of  production,  whether  in  agriculture,  mining,  manu- 
facturing, or  in  that  part  of  the  production  or  leading  forth  of 
useful  commodities  to  the  service  of  man  which  is  commonly 
called  distribution.  All  the  work  which  is  performed  under 
either  of  these  names  is  but  a  conversion  of  forces,  i.  e.^  moving 
something  from  the  soil  or  the  mine  for  the  use  of  man. 

TABLE    I. 
GRAIN   CROPS   OF   THE  UNITED   STATES. 

Bushels.  Maize,  Wheat,  Rye,  Oats,  Barley,  Buckwheat. 

1,127,499,187       ,^^^^__^_,«^^^«i^ 

1,343,027,868  ^^^^^^^^^^mmmmmmm^^^^mmmmmm^^ 

i,329i7i94oo        i— —-— -—>—————«— —« 

1,450,789,000  tB^^im^armammimMc^mm^mmam^aaBammimmmmmmmmt 

1,491,412.100  ^^^^m^m^^^i^^a^^^^^^^^mmmmmim^tmimm 

1,629,027,600  mmmmm^matammm^i^^^^^^^K^mmmmmaammm^^a^m 

1,528,776,100  ^^— ^— ^^^—» B—  I        II— — il^OB 

1,664,331,600  ^^m^^amammmmmmi^^K^^^Bmam^mmiBnami^^i^mmmm 

1,538,892,891  mmmmmmmmmammmoMmmmmmmmamm 

1,455,180,200  t^^m^t^oB^^Bamiammammamm 

2,032, 2'?5. 300  ^^^^a^^^m^i^mimnmm^^ 

1,962,821,600  ^mt^mammi^mmm^^^mmmmmmm 

2,178.934,646  — ■— — ^-' 

2,302,254,950  •^^™— "I I   ' "I  I  I ■-^— « 

2,434,884,541  — — — ^ 

2,448,079,181  mmB^^mmm^i^tmamMa^mmt^m^ 

2,066,029,570  m^^m^mmma^mKmm^mm^amixi 

2,699,394.496  ^»^— =■ 

2,623,319.089  mmmmmmmm^mmmm^^mi^^mm 

2,981,920,332  wamm^mmmmmma^^mmmmmtmm^ 


234       THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC 

TABLE    2. 

MILES  OF  RAILROAD    IN    OPERATION  ON   THE    1ST    JANUARY    IN   EACH   YEAR  AND  THE   MILi 
ADDED    IN   THE   YEAR   ENSUING. 


1865 

33.908 

I1I77 

1866 

35,085 

1,716 

1867 

36,801 

2,449 

1868 

39.250 

2,979 

1869 

42,229 

4.615 

1870 

46,844 

6,070 

1871 

52,914 

7,379 

1872 

60,293 

5,878 

1873 

66,171 

4,107 

1874 

70,278 

2,105 

1875 

72,383 

1.713 

1876 

74,096 

2,712 

1877 

76,808 

2,281 

1878 

79.089 

2,687 

1879 

81,776 

4,721 

1880 

86,497 

7,048 

I88I 

93.543' 

9,789 

1882 

103,334 

".59' 

1883 

114,925 

6,618 

X884 

"1,543 

4,000 

188s 

125,543 

THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    235 

What  then  has  happened  since  the  year  1880  ?  Railway- 
mileage  has  increased  since  Jan.  i,  1880,  over  forty  per  cent. 
The  crops  of  grain  increased  in  1882  ten  per  cent,  as  com- 
pared to  1880,  and  in  1883  a  little  over  seven  per  cent.,  and 
yet  these  crops  are  more  than  ample  to  meet  the  present 
demand  of  the  country;  and  since  1880  there  has  been  first 
a  rise  and  then  a  small  reduction  in  the  price  of  the  leading 
farm  products,  as  will  appear  by  consideration  of  the  graphi- 
cal tables  given  herewith.  The  thirteen  tons  of  beef,  pork, 
wheat,  corn  oats,  butter,  wool,  and  lard  which  have 
been  taken  as  the  unit  in  this  consideration,  which  were 
worth  $632.68  in  gold  in  1869,  $631.32  in  1880,  $776.13  in 
1882,  were  worth  on  June  15,  1884,  $621.75.  That  these 
prices  have  been  even  so  well  maintained  at  this  time  gives 
proof  of  the  continued  prosperity  of  agriculture  in  spite  of 
adversity  elsewhere.  The  charge  for  moving  these  products 
on  the  principal  railroads  has  fluctuated  but  little  since 
1879;  ^^  "^^y  t>e  at  this  moment  a  little  less  than  at  that 
time,  but  if  the  charge  is  now  less  it  is  below  the  cost  of 
the  service  and  cannot  be  continued.  Our  great  production 
of  grain  at  less  and  less  cost,  and  our  great  reduction  in 
the  charge  for  distribution,  have  been  met  since  the  year 
1880  by  increasing  crops  in  other  countries,  coupled  with 
improved  methods  of  distribution,  not,  it  is  true,  equal  to 
our  own,  but  yet  working  a  possible  future  change  in  all  the 
conditions  of  agriculture  in  this  country  so  far  as  the  wheat 
crop  is  concerned. 

In  the  treatise  upon  "The  Railroad  and  the  Farmer" 
several  computations  were  made  as  to  the  number  of  dollars 
which  this  reduction  in  the  railway  charge  represented.  It 
is  something  enormous.  Had  the  actual  quantity  of  mer- 
chandise moved  by  the  railroad  in  the  year  1 880  been  sub- 
jected to  the  average  rate  per   ton    per  mile   which    was 


236  THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

charged  from  1866  to  1869  inclusive,  the  difference  would 
have  amounted  to  at  least  $500,000,000  and  perhaps  $800,- 
000,000  more  than  the  actual  charge  of  1880;  and  yet,  up 
to  this  period,  the  prices  of  leading  farm  products  ha(i  not 
been  substantially  affected  by  this  enormous  change, — that 
is  to  say,  Eastern  consumers  of  Western  productions  as  yet 
received  no  benefit  from  this  great  reduction  in  the  cost  of 
distribution.  But  while  consumers  in  the  East  may  have 
as  yet  received  little  benefit  in  a  direct  reduction  in  the 
prices  of  Western  produce,  yet  indirectly  the  benefit  has 
been  measureless.  The  grain  and  meat  needed  for  a  year's 
subsistence  of  one  person,  which  would  have  cost  a  large 
portion  of  the  time  and  labor  to  raise  upon  a  comparatively 
sterile  soil,  to  which  agricultural  machinery  can  be  applied 
in  least  measure,  is  moved  a  thousand  miles  for  a  sum 
equal  only  to  one  day's  wages  of  a  common  laborer.  On 
the  other  hand,  we  import  annually  articles  which  are  free 
of  duty  to  the  amount  of  $200,000,000  and  one  third  of 
dutiable  imports  of  the  value  of  $150,000,000,  which  are 
either  articles  of  food  or  crude  materials  which  enter  into 
all  the  processes  of  domestic  industry,  and  these  are  all 
bought  and  paid  for  with  the  excess  of  grain,  meat,  and 
dairy  products  which  we  could  not  eat,  the  excess  of  cotton 
which  we  could  not  spin,  the  excess  of  oil  which  we  could 
not  burn,  all  of  which  would  either  be  not  produced  or 
would  be  wasted  if  the  low  charges  upon  our  railroads  did 
not  enable  us  to  export  them. 

The  consolidation  and  more  effective  service  of  the  rail- 
ways of  the  United  States  has  been  in  the  nature  of  a  great 
and  novel  invention,  and  it  has  worked,  as  all  great  inven- 
tions work,  for  the  time  being,  namely,  to  the  immediate 
benefit  of  a  relatively  small  part  of  the  community, — that  is 
to  say,  to  the  producers  of    particular  substances.     It  is, 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.  237 

perhaps,  now  working  as  other  great  inventions  work  in  the 
secondary  stage,  namely,  more  to  the  benefit  of  the  con- 
sumers. And  yet  even  this  is  doubtful.  The  rapid  in- 
crease in  our  home  consumption  seems  to  be  sufficient  to 
maintain  prices,  even  when  exports  are  greatly  lessened. 
The  world  will,  however,  hereafter  be  less  subject  to  local 
scarcity,  less  subject  to  particular  famine  ;  and  a  great  mass 
of  consumers  of  food  may  hereafter  be  required  to  devote 
a  less  proportion  of  their  own  labor  to  procuring  the  great 
staple  articles  of  food.  The  forces  in  action  in  this  matter 
have,  therefore,  been  vastly  greater  than  have  appeared 
upon  the  surface,  and  a  temporary  retardation  in  the  work- 
ing of  these  forces  by  corners  in  grain  and  the  like  have 
been  insignificant  incidents  of  little  permanent  consequence. 
Let  us  now  consider  the  influence  of  these  changes  and 
of  other  great  changes  in  their  effect  upon  the  railroads 
themselves.  From  a  compilation  of  the  statistics  given  in 
the  census  of  1880,  coupled  with  a  consideration  of  the  data 
contained  in  Poor's  Railway  Manual,  it  is  manifest  that  the 
staple  articles  of  food — corn,  meat,  and  dairy  products — 
constitute,  at  least,  fifty  per  cent,  of  the  tonnage  moved 
over  all  the  railroads  of  the  United  States.  They  of 
course  constitute  a  much  larger  proportion  on  some  rail- 
roads than  on  others.  Coal  and  timber  in  its  various  forms 
constitute  not  less  than  thirty  per  cent,  of  the  remainder, 
and  probably  a  yet  larger  proportion.  If  we  reduce  bushels 
to  tons  we  find  that  the  present  average  grain  crop  of  the 
United  States  weighs  75,000,000  tons.  Hay  weighs  from 
30,000,000  to  35,000,000  tons  ;  it  is  not  all  moved  by  the 
railway  in  its  primary  form,  but  if  we  add  to  the  hay  which 
is  moved  its  product  in  the  secondary  form  of  meat  and 
dairy  products,  we  find  a  probable  tonnage  of  30,000,000  to 
40,000,000  tons.     It  is  more  difficult  to  convert  the  timber 


238    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

products  into  tons,  but  approximately  coal  and  timber  to- 
gether amount  to  over  100,000,000  tons.  We  therefore  have 
over  200,000.000  net  tons  of  food,  fuel,  and  materials  for 
shelter  to  be  moved  by  a  railway,  at  some  point  or  in 
some  part  of  their  distribution,  even  if  they  have  been 
moved  part  way  by  water  on  the  road  from  producer  to 
consumer.  On  the  other  hand,  the  entire  production  of 
metals  within  the  limits  of  the  United  States  is  less  than 
six  million  tons,  cotton  less  than  two  million,  wool  less 
than  half  a  million ;  and  although  these  articles  are  con- 
verted into  many  different  forms,  and  are  moved  twice, 
thrice,  four  times,  or  more,  yet  in  the  aggregate,  after  allow- 
ing for  all  duplications,  they  cannot  amount  to  over  twenty 
per  cent.,  as  compared  to  grain,  timber,  and  coal,  eighty 
per  cent.  From  the  census  data  and  from  the  figures  of 
Poor's  Manual  it  would  be  difficult  to  make  out  over  fifteen 
per  cent,  of  miscellaneous  merchandise  in  weight,  consist- 
ing of  metals,  fibres,  machinery,  fabrics,  and  miscellaneous 
goods  and  wares,  as  compared  to  eighty-five  per  cent,  in 
weight  of  food,  fuel,  timber,  and  other  primary  or  crude 
products  of  the  field,  the  coal  mine,  or  the  forest. 

Now,  then,  if  the  grain,  hay,  and  meat  product — that  is, 
the  food  of  the  people — constitutes  one  half  the  substance 
moved  by  the  railway,  and  if  this  product  has  not  increased 
in  any  measure  beyond  ten  per  cent,  during  the  last  four 
years,  in  which  period  the  railway  mileage  has  increased 
forty  per  cent.,  we  have  a  sufficient  explanation  of  all  the 
disturbance  in  railway  stocks  and  bonds.  Moreover,  a  very 
large  proportion  of  the  railway  construction  from  1869  to 
1880  inclusive  represented  a  very  much  higher  actual  outlay 
or  cost  than  the  actual  outlay  or  cost  of  what  has  been  con- 
structed since.  The  extreme  example  of  this  change  is  to 
be  found  in  the  reduction  of  the  price  of  steel  rails  from 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    239 

over  $150  a  ton  to  less  than  $30  in  gold,  with  a  correspond- 
ing decrease  in  the  cost  of  all  the  metal  work  pertaining  to 
railways. 

Now,  it  matters  not  how  much  may  be  the  nominal 
amount  of  the  stock  and  bonds  issued  either  before  or  since 
1880.  It  matters  not  whether  a  half  or  two  thirds  or  three 
fourths  even  of  any  railroad  is  represented  by  what  is  called 
watered  stock  or  not.  All  these  enterprises  are  now  brought 
face  to  face  with  the  simple  question — Is  there  enough 
material  to  be  moved^  adjacent  to  their  respective  lines,  at  ex- 
isting rates  of  freight ,  by  which  an  income  on  actual  cost  can 
be  earned,  basing  such  cost  upon  what  it  would  now  be  if  the 
roads  were  constructed  to-day  f  It  may  be  that  watered 
stock,  so  called,  which  was  issued  before  the  great  reduction 
in  railway  charges,  may  now  be  sustained  by  actual  intrinsic 
value  of  double-track,  equipment,  or  connections,  since  paid 
for  out  of  earnings ;  or  it  may  be,  as  in  the  case  of  the  New 
York  Central  Railroad,  that  the  right  of  way  and  terminal 
real  estate  is  now  worth  a  very  large  share,  if  not  as  much 
as  all  the  outstanding  stock  and  bonds;  this  does  not  alter 
the  main  question  as  above  stated. 

It  will  presently  be  made  apparent  that  the  charges  for 
moving  merchandise  on  long-established  and  fully  equipped 
roads  had  been  reduced  in  1879  to  the  lowest  possible  terms 
consistent  with  even  a  small  profit ;  therefore  all  new  roads 
are  met  by  one  of  three  questions  :  First,  if  extensions  into 
new  sections,  will  the  prices  of  possible  products  warrant 
the  movement  of  crops  except  at  rates  which  will  barely 
sustain  the  road  on  a  basis  of  cash  cost  ?  Second,  if  parallel 
roads,  are  they  capable  of  being  sustained  at  all  ?  Third,  if 
new  roads  in  a  section  already  well  furnished,  is  there  local 
traffic  enough  to  pay  even  simple  interest  on  a  cash  cost  ? 
In  other  words,  have  we  not  entered  upon  the  final  period 


240    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

in  the  history  of  railroads,  to  wit :  the  period  in  which  they 
must  be  treated  by  their  owners  on  a  strictly  commercial 
basis  for  the  purpose  only  of  earning  a  moderate  income  on 
the  actual  cash  cost  ? 

Before  pursuing  the  subject  further,  with  a  view  to  con- 
sidering the  reasons  why  we  may  perhaps  expect  a  speedy 
return  of  substantial  prosperity  after  the  railway  system  has 
become  adjusted  to  these  new  conditions,  I  now  submit  cer- 
tain tables  which  were  originally  constructed  for  an  article 
on  the  "  Railroad  and  the  Farmer,"  published  in  i88l,  which 
tables  Jiave  been  corrected  and  extended  to  the  present 
date.  I  am  indebted  to  the  following  authorities  for  the 
data  on  which  these  tables  are  based  :  The  Department  of 
Agriculture  of  the  United  States;  E.  H.  Walker  of  the 
Produce  Exchange  of  New  York;  Poor's  Railway  Manual; 
Messrs.  Mauger  and  Avery  of  New  York  and  Boston ;  G. 
R.  Blanchard  of  New  York  ;  H.  Sabine,  Railroad  Commis- 
sioner of  Ohio  ;  the  reports  of  the  Iron  and  Steel  Associa- 
tion;  and  the  United  States  Census  of  1880. 

The  grain  crops  having  increased  only  an  average  of  five 
per  cent.,  while  the  railway  mileage  increased  more  than 
forty,  a  part  of  which  extension  consisted  of  new  routes 
from  West  to  East,  we  may  naturally  look  for  a  reduction 
of  the  tonnage  on  any  principal  route  between  West  and 
East,  and  this  we  find  even  on  the  Lake  Shore  and  New 
York  Central,  as  will  appear  by  tables  3  and  4. 


TABLE    3. 

LAKE  SHORE  &  MICHIGAN  SOUTHERN  RAILROAD.  — ACTU/.L  TONS  MOVED. 
Tons 

Yr.  Miles.  Moved.  Increase  of  Tons  Moved 

'6g  Consolidated  in  this  year. 

'70  1,013  2,978,725  ^^— ^— ^"-^i— 

'71  ri073  3,784,525  — i^^^— — ^^— 

'7a  1,136  4,443,092  ^— — — ^^^— i— ^— i^— 

'73  1,^54  5iU6,66i  ■^"■~'~ 

'74  1.17s  5.221,267  — ^— — — — — — ^-^^— 

'75  1 1^76  5,022,490  ^^i^^^^^™^^^"— i^^^^^i"""^™ 

'76  1,177  5,635, '67  ——--——— ii^^^——^— 

'77  1,177  5,5'3.398  ———--——--—--——--—-—— 

'78  1,177  6,098,445  •■"^^^^"■■-■^—  ^— ^^— " 

'79  i,»77  7,541,294  «— -=— — --—--■^-™---—— — — ^ 

'80  1,177  8,350,336  — ii^— ^ 

'81  1,177  9,164.508— ^^-—^———■^— ^—^■—■i^^^^^^—i^ 

'83  1,274  9,195,528    ^™^"^^^^"— ■^^^— i^^^^^™^^l^— i^^^-UMB^ 

'»-j  1,340  8,478,605  a^^^^^Bi^aa^^MMaa^^^BaBiHMBM^MMHii— ■■ 


LAKE  SHORE  &   MICHIGAN   SOUTHERN. — TONS   MOVED   ONE    MILE, 
year.  Tons  Moved  one  Mile.  Increase  of  Traffic,  Tons  per  Mile. 

1870  574,035.571    ^— ^— ■^— ™ 

1871  733,670-696   B^^^BB^^^^B 

1872  924,844,140   ^^^^MiM^^^^H^BHMM 

1873  1,053.927,189   i^^^^^HB^O^^l^B^^M^ 

1874  999,342,041   •— >-^— ^^^1-^^i- 

1875  943,236.161   — — — ^^— [^^— — 

1876  1,133,834.828  «BiilB^BiHMi^H^MHHia^Ba 

1877  1,080,003,561  ^IBMeBBBMBBI^M^^B^MMBaiMBIMBB 

1878  1.340,467,826  "^t^^^—^^—i^^^^^^^M^iBBBM^^B* 

1879  1,733-423,440  ^^— — ^^— — — — ^— ^^— ^-i— » 
I8S0  1,851,166,018  «^K^^H^^lMiiHB^^H^BnMHHiHBMMMMMHiBH> 
I88I  2,021,775,468  ^nMDBMHBHlKBBi^BBaMi^^H^^HM^BMBMMBMilHMMK 

1883  1,892,868,224       II  —I—— —————— —a—— 

1883  1,689,512,415        B^MHHIIMi^^MB^^BMaHBB^HBHB^ilBBHl 

LAKE  SHORE  &  MICHIGAN  SOUTHERN. — CHARGE  PER  TON    PER  MILE. 
AVERAGE  UPON  ALL  CLASSES  OF  MERCHANDISE. 


Year. 

1870 
187 1 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 
1881 
1883 
1883 


Freight 
Receipts. 

DOLS. 

8,746,126 

10,341,218 

12,R24,863 

14,192,369 

11,918,350 

9,639,038 

9.405,629 

9,476,608 

10,048,953 

11,288,261 

14,077,294 

12,659.987 

12,022,577 

12^00,094 


Charge. 

CTS. 

504 
39^ 
374 
335 
180 
010 
870 
864 
734 
642 
750 
617 
,638 
728 


Decrease  of  Charge  per  Mile. 


t  AISLE   4 
KfeW   YORK   CENTRAI,  &    HUDSON    FIVER   RAILROAD. — ACTUAL  TONS  MOVED. 


Tons 
Yr.  Miles.  Moved. 
(>9      842     3,190,840 

70        842      4,122,OCX> 

7t  844  4,532,056 
■7-'  850  4.393.905 
'7.]      858     5522,724 

'74  1,000    6,114,678 

'75  1,000    6,001,984 

'76  1,000    6,803,680 

'77  i,oco    6.351,356 

'78  1,000     7,635i4«3 

•79  1,000    9,005,753 

'80  I, coo  10,533,038 
•81  993  11,591,379 
'82  993  11,330,393 
'83      993  10,892,440 


NEW   YORK   CENTRAL   &    HUDSON    RIVER   RAILROAD. — TONS  MOVED   ONE  MILE. 


1869  589,362,849 

1870  769,087,777 

1871  888,327,865 

1872  1,020,908,885 

1873  1,246,650,063 

1874  1,39^560,707 

1875  1,404,008,029 

1876  1,674,447,055 

1877  1,619,948,685 

1878  2,042,755,132 

1879  2,295,827,387 

1880  2. 525, 139,145 

1881  2,646,804,098 

1882  2,394,799,310 

1883  2,200,896,780 


NEW  YORK  CENTRAL  &  HUDSON  RIVER  RAILROAD.^^CHARGE  PER  TON  PER  MILE. 
AVERAGE  ON  ALL  CLASSES  OF  MERCHANDISE. 

Decrease  of  Charge  per  MUe. 


^car. 

Receipts. 

Charge. 

DOLS. 

CTS. 

1869 

14,066,386 

2.387 

1870 

14,327,418 

1.853 

1871 

14,647,580 

1.649 

1872 

16,259,650 

1.592 

1873 

19,616,018 

1.573 

1874 

20,348,725 

1.462 

1875 

17,899,702 

1.275 

1876 

«7,593,26s 

1. 05 1 

1877 

16,424.317 

1.014 

X878 

19,045,830 

•930 

1879 

18,270,250 

.796 

x88o 

22,199.966 

.879 

1881 

20,736,750 

.783 

188a 

17,672,252 

.738 

1883 

20,142,433 

.910 

THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    243 

It  will  be  observed  that  so  long  as  the  increase  of  crops 
kept  pace  with  the  increase  of  railroads,  and  both  were  ac- 
companied by  such  an  export  demand  for  breadstuffs  as  to 
maintain  the  through  traffic,  the  rate  of  charge  diminished, 
but  when  the  traffic  diminished  the  rate  of  charge  soon 
began  to  show  a  slight  increase.  This  is,  doubtless, 
caused  by  the  change  in  or  less  proportion  of  through 
traffic.  The  following  table  shows  that  while  the  traffic  on 
the  New  York  Central  and  Lake  Shore  decreased  in  some 
measure  in  1882  and  1883,  yet  the  traffic  on  all  the  roads 
reporting  in  New  York  increased.  The  data  hereafter 
given  from  the  statistics  of  Ohio,  in  which  the  through 
and  local  tonnage  are  separated,  also  fully  sustain  this  view, 
and  show  how  railroads  which  may  at  first  be  mainly  sup- 
ported by  through  traffic  are  ultimately  supported  mainly 
by  local  traffic.  Table  5  shows  the  continued  increase  of 
traffic  on  all  railroads  reporting  in  the  State  of  New  York. 

This  table  includes  some  roads  of  which  only  a  small 
part  actually  lies  within  the  limits  of  the  State. 

The  following  table,  No.  6,  gives  the  earnings,  expenses, 
and  profits  per  ton  per  mile  on  the  New  York  Central  and 
Hudson  River  Railroad  in  1855,  1865,  and  from  1869  to 
1883  inclusive. 

It  will  be  manifest  that  when  such  a  strong  and  rich  cor- 
poration as  this  has  been  forced  to  do  its  work  for  the  last 
five  years  at  a  profit  of  less  than  a  quarter  of  a  cent  per  ton 
per  mile,  or  one  fortieth  of  a  cent  profit  for  moving  a  barrel 
of  flour  one  mile,  there  is  no  margin  for  any  further  reduc- 
tion of  any  moment;  and  it  also  becomes  apparent  that  the 
construction  of  a  parallel  line  for  the  purpose  of  sharing  this 
work  was  a  pure  waste  of  capital  and  almost  wholly  a  loss  to 
the  purchasers  of  the  securities,  and  that  the  ruin  of  its  pro- 
moters might  have  been  foretold  at  the  beginning,  as  it  was 


244    THk  RAILWAY.  THE  FARMER,  AND    TJtiE  PUBLIC, 


O'    N 


fl     IT)   VO 


cooooooooooooooooooooooooooo 


THG  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC,    245 


lllllll    I 


O     m    fo   t^  oij 


•«»•    c^    «^    •«■ 


10    •*■ 

CO    M 


■*    ro    M     m 


K         C     -<-    ro 
<i         O     f^.    >'> 

<       c.  ^    fl 

I 

I 
I 


m    tn   ut   tf>  ' 


E  !1  I 


tooo*o    'oiO'^w    o 


•<♦•  C    <C      0>    CO 

M  rj    ©N    r^  CO 

O  On    r^  00     t^ 

M  6     d    0     d 


oooooooocooceoooooooooSSmmM 


246    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

by  more  than  one  observer.  By  whom  this  great  reduction 
in  freight  charges  has  been  mainly  or  directly  enjoyed  will 
appear  from  the  following  computation  of  the  value  of  thir- 
teen tons  of  staple  produce,  and  the  comparison  of  the 
freight  charge  thereon.  It  must,  however,  be  remembered 
that  the  greater  reduction  has  been  made  on  the  through 
traffic  on  grain  and  provisions  than  on  any  other  class  of 
trafific,  hence  the  tables  do  not  show  the  full  benefit  to  the 
Western  producers. 

TABLE    7. 

COST  OF  20  BARRELS  OF  FLOUR,  lO  BEEF,  lO  PORK,  lOO  BUSHELS  WHEAT,  lOO 
CORN,  100  OATS,  100  POUNDS  BUTTER,  lOO  LARD,  AND  lOO  FLKECE  WOOL, 
IN  NEW  YORK  CITY,  AT  THE  AVERAGE  OF  EACH  YEAR,  COMPILED  BY 
MONTHS,  IN  CURRENCY  AND  GOLD  ;  COMPARED  GRAPHICALLY  WITH  THE 
DECREASE  IN  THE  CHARGE  PER  TON  PER  MILE  ON  THE  NEW  YORK  CENTRAL 
&   HUDSON    RIVER    RAILROAD,  DURING    THE    SAME  PERIOD. 

Cost  in 
Year.  Currency.  In  Gold. 

1869  $845.58  — i^^^^— — i^—  $632.68  -■— ^— m^— ■■■— I 

1870  891.80  m^^mBBEM^^^mmammm^m^mm  776.02  ^m^a^^^^^t^immamm^ 

1871  821.60  i— — ^— —  735.33  ^^^m^mm 

1872  760.24  '  675  92  ^"•^•^^"•'^^^^^ 

1873  755-68  .— ^^^— — ■■— •  662.50  ^m^^^^mmmi^^^ 

1874  831.98  -—==»=——  748.54  — ^-^^^^^-■— ■ 

1875  800.28  ^mmmmmaa-:^^^^^^^tmmm  696.40  ■■■■■iBi^^^^^i^""^ 

1876  727  49  «^— ^— ^^—  651.74  ■n^^M^^naaaiB 

1877  780.29  *^-^— — ^■— -^  751-95  ^^— — ^^^—i ■- 

1878  575-41  — — — —  569.81  — «^^ii^ 

1879  568.34  -^— — —  568.34  ^^^^— ^— ■ 
x88o  631.32  ^^^^^m^mm^mm  63I.32  1^1^^— i^^^—^ 

1881  703.10  •^"■-^■^■■"^^^  703-10  —■^—^■i^^"""^"^^ 

1882  776-13  —— ^^■— ^— ^^  776.13  — ^-iii^^— ii^— ^ 

1883  662.11  ^^^^"— i— i"-"—  662  II  mm^^mmm^^^^^mm 

1884  621.75  ^^^^—  [June]  621.75  ■^— i^^^^^^— 

Decrease  in  the  charge  per  Ton  per  Mile,  N.  Y.         Decrease  in  the  charge  per  Ton 
C.  &  H.  R.  R.  R.— In  Currency.  per  Mile,  N.  Y.  C.  &  H.  R. 

R.  R.— In  Gold. 

1869  a.38  CtS.  1——  m^mm^mmt  1.78  CtS.  .—  ■.■  ■■ 

1870  1.85  "  ■^-^— — ^^^■^^^—  1.64  "  -^-i^^^^— ■— ^» 

1871  1.65  "  ^■—  1.40  "  •-— — 
1873  1.59  "  — i^— —  1.41  •'  — — — — 
1873  1.57  "  — — —  1.38  "  —— 
«874  X.46  "  ■--^-— —  1.31  "  ■^-1^— I— — 
1875  X.97  "  m^a^^^m^^mmm  J. II  *'  ^mm^m^mmmm^^ 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    247 


1876 

1.05  cts 

1877 

I.03  " 

1878 

.93  " 

1879 

.79  " 

1880 

.88  " 

I88I 

.78  " 

i88a 

.73  " 

.883 

.91  " 

^cts. 
97   " 


Freight  charge  in  year  1855,  in 
gold,  3.27  cts 

Freight  charge  in  j-ear  1865,  in 
currency,  3.4s  cts.      .     ,  '.    . 


To  whom  the  advantage  has  accrued  will  be  made  yet 
more  clear  by  setting  off  the  actual  dollars  of  freight  charges 
on  thirteen  tons  moved  1,000  miles,  or  from  Chicago  to 
New  York  or  Boston,  at  the  average  rates  charged  by  the 
New  York  Central  &  Hudson  River  Railroad  on  all  classes 
of  trafific  from  1869  to  1883,  inclusive,  using  gold  values  only 
in  respect  to  prices  and  rates. 

TABLE  8. 

PRICES  IN  GOLD  IN  THE  NEW  YORK  MARKET  OF  20  BARRELS  FLOUR,  EXTRA 
STATE,  100  BUSHKLS  WHEAT,  MILWAUKEE  CLUB,  lOO  BUSHELS  CORN,  WEST- 
ERN MIXED,  100  BUSHELS  OATS,  10  BARRELS  MESS  PORK,  lO  BARRELS  MESS 
BEEF,  lOO  POUNDS  LARD,  lOO  POUNDS  STATE  DAIRY  BUTTER,  lOO  POUNDS 
MEDIUM  WASHED  CLOTHING  WOOL,  COMPARED  WITH  CHARGE  REDUCED  TO 
GOLD  OF  MOVING  THE  ABOVE  QUANTITY,  EQUAL  TO  I3  TONS  I,000  MILES, 
AT  THE  AVERAGE  RATES  CHARGED  BY  NEW  YORK  CENTRAL  &  HUDSON 
RIVER  RAILROAD,   1869  TO  1883,  INCLUSIVE. 

Cost  Decrease  in  the  Charge  per  Ton  per  Mile, 

Prices.  N.  Y.  C.  &  H.  R.  R.— In  Gold. 

■EBeaHB^B^BB  T.78  CtS.  mma^mmmmimimm^^^m^^^ 

-i^— — ^—  1.64      '^     — .^.i..._ 

— —  1.40     •'     «— i— _^ 

^^^— —  1.41      "      ^mm^^mmm,mmmmmmm, 

— —  1.38      -     .^.^__ 

^^— —  1.31      "     ^..i.....i.i^.i_ 


year. 

In  Gold 

1869 

$662.63 

1S7I 

735-33  « 

IS72 

675.92 

1873 

662.50  « 

1874 

748.54 

1875 

696.40  « 

1876 

65174  ' 

1877 

751-95  • 

1878 

569.81 

1879 

568.34  • 

1880 

631.32  ' 

1881 

703.10  . 

1882 

776.13 

1881, 

662. 11  . 

1884 

621.75  ■ 

•34 

—  .97 

.92 

•79 
.88 
.78 

■^  -73 

.9X 

[June]  .83 


243    THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC, 

Per  cent,  of  Freight 
Dollars,  13  Tons,    Charge  to  Value  in 
Year,     i, coo  Miles,  New  York. 


1869  231.40  36.61  I 

1870  213.20  S7.47 
X871  182.00  24.76 

1872  183.30  27.16 

1873  179.40  27.05 

1874  170.30  22.73 

1875  144.30  20.73 

1876  »  122. 20  18.74 

1877  126.10  16.76 

1878  119.60  20.98 

1879  102.70  i8.c8 
xSSo  X  14.40  x8.i2 
x88i  107.40  15.27 
x88a  94-90  12.22 
1883  1x8.30  17.87 


The  above  proportions  of  the  value  of  the  produce  ab- 
sorbed by  the  freight  charge  should  be  reduced  in  just  the 
measure  that  the  rates  per  mile  on  the  movement  of  grain 
and  meat  have  been  less  than  the  average  charge  on  the 
whole  traffic.  For  instance,  thirteen  tons  of  grain  have 
been  brought  from  Chicago  to  New  York  at  a  lower  charge 
by  far  than  any  of  the  above  figures.  This  change  would 
reduce  the  proportion  of  the  charge  now  in  greater  meas- 
ure than  in  the  earlier  part  of  the  period  under  considera- 
tion. 

But  it  may  be  said  all  these  data  are  limited  to  the  through 
traffic,  and  the  local  traffic  is  still  subjected  to  onerous 
charges  and  unjust  discrimination.  In  reply  to  which  I  sub- 
mit Table  No.  9,  in  which  the  receipts,  expenses,  and  profits 
of  all  the  railroads  reporting  in  New  York  are  analyzed  and 
compared,  by  which  it  will  appear  that  in  1879  ^^^^  profit  on 
all  the  traffic  was  brought  down  to  less  than  one  quarter  of 
a  cent  per  ton  per  mile,  and  has  averaged  less  than  that  rate 
ever  since.  What  it  may  be  this  year  cannot  yet  be 
stated. 


tHE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    249 


II 


2  :? 


10    m   fO 


'«-rncnc«    cnct    roc«    nm 


MOO 
1^    ir>    0>  ' 


I- 

a 


2  8» 


II. 

^51 


C>    -h    0      ■* 


■♦    ro    -<      O 


8  a 

ON  00 


2  S 

C    o 

s  s 

o  o 


■*  >A  vo    r*  00    OS 


u     t^i>.t^r^f^r^c>.t>.t^r^coooooeo 
^mmooooooooooooeoooMooMM 


gi 

CO 

00 

M 
00 

S>  s, 

OO    00    00 

00    00 

00 

^  ^ 

CO 

r 

»J 

^     vg 

va    ^    vq 

-J   ->a 

^ 

lo      M 

vO 

00    VI 

0>iji    ^ 

W       N 

0     NO 

*.     W 

M 

M 

„ 

M        M 

M         M         M 

M        M 

»    ^ 

VO 

Ul 

o\  o\ 

^     Ul      00 

00 

"^  ^ 

- 

-J^ 

r 

U)     *• 

Ln 

o    ^ 

Ov  *.    Cj 

w    o 

00 

00  vb 

S2 

U> 

^ 

j3 

0    tn 

*>     so     --1 

03   vO     ■*■ 

^^ 

? 

i;^ 

g 

s. 

M 

0 

03 

M    b 

vj      OS  ■^ 

O    tl) 

"  s 

w    W 

•ii. 

f^   -^ 

-    vO     >^' 

J?^ 

t/1 

00     O 

Ul      N 


00    00    00     03    00 
>J     V)     vj     vj     vj 

vo    00  '^    a>  ui 


VJ        VJ        V) 


M     0>    00  tn 


O     O  O    »-l     0\ 


OOOJV)     j>  *■*•*•     tjj     WW 

^Jk       Ooi      M      OO-^-vOOJ      •- 
vj.^v)oi4k      0\0\V0       -> 
UJO      MOi6iCjvoCovj 
vlvotn      MOJ      0OO\-JUl 

OOLn      Ox-'coLnCo'ovi 
O      0\M      00O\vO       OA       O 


vj  4^  sC  ^  »  W 
•-  N  N  ^  Vl  Ji, 
^      O     U)     Ul     M       M 


II 

1 

m   00 
0    « 

tllitt 

t 

III 

M      »9 

8 

M       M 

„ 

00     N 

O    VO    v»     O^  v4    vj 

JOn 

0\  Ol     Ov 

H 

OJ    *>) 

^ 

Ol     <£> 

^  1,  :5  s  g'  8 

To  »b   Ol 

t3* 

-     Ol 

Ol      00 

8 

00  w     o\ 

3 

•^      M 

VO 

4k     »p 

M      00   Ol     *.     4>.     4k 

_M       j»    Vp 

c 

0^ 

C)      - 

N 

vj    "bo 

0     ON    On  Ol      OS  Ol 

V4 

o»%   ^ 

H      VI 

w 

J^      OO 

Ol      -     Ul      00   vj      CO 

0 

►H    *o 

0 

vj    -f^ 

o.     00    «    vo    vo     0 

VI 

^.       N     VO 

cr 

THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    25 1 

Had  the  rate  of  1870  been  charged  on  the  traffic  of  1883, 
the  sum  would  have  been  at  1.7016  on  9,286,216,628  tons, 
carried  one  mile,  $158,014,262;  the  actual  charge  was 
$83,464,919,  making  a  difference  of  $74,549»343  saved  on 
one  year's  traffic  on  the  lines  reporting  in  New  York. 

But  again,  let  us  examine  the  traffic  of  the  great  State  of 
Ohio,  midway  between  the  grain  fields  of  the  far  West  and 
the  manufacturing  States  of  the  far  East,  a  State  in  which 
agriculture,  mining,  and  manufacturing  are  combined.  The 
invaluable  tables  of  her  Railroad  Commisioner,  Mr.  Sabine, 
separate  the  through  from  the  local  traffic,  and  these  tables 
show  how,  in  the  course  of  time,  all  our  existing  railway 
lines,  except  such  speculative  absurdities  as  those  which 
have  been  built  close  alongside  other  tracks,  may  become 
self-sustaining  and  profitable. 

Again  we  find  that  the  average  freight  charge  has  been 
reduced  to  a  little  less  than  one  cent  per  ton  per  mile,  and 
there  it  has  substantially  rested  for  seven  years,  because  it 
cannot  go  lower  without  stopping  the  traffic  altogether. 

TABLE    12. 


Freight  Charge. 

1869  9.446  "^ 

1870  1.993  — 

1871  2.215  "i" 

1872  X.569  i^" 

1873  1.566  -^ 

1874  1.334  ■— 

1875  1.259  ^ 

1876  1.117  ^—i 

1877  .933  ^ 

1878  .961  ^-« 

1879  -815  — 

1880  .895  ■— ■ 

1881  .9x5  ^— 

1882  .807  aaH 

1883  .875  — 


Tons  per  mile  in  1883,  8,577,357,803,  at  1869  rates,  2.446         .     $20i,8cx>,ooo 
At  actual  rate  of  1S83,  .875 67,000,000 

Difference $134,800,000 


252    THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC, 

At  currency  rate  of  1869  reduced  to  gold,  1.80  .         .        .        .     $156,400,000 
Actual 67,000,000 


Difference         .....       $89,400,000 
Difference  on  local  traffic  only  .         .       $60,000,000 

And  once  more  we  prove  that,  had  the  freight  charge  of 
1869,  reduced  to  gold,  been  put  upon  the  traffic  of  1883,  the 
results  would  have  been,  in  round  figures,  as  follows: 

8.577.357.803  tons  moved  i  mile,  at  i.So  cts.  per  ton  per  mile  .     $156,400,000 
Actual  charge 67,000,000 


Difference $89,400,000 

As  two  thirds  of  this  was  on  local  traffic  the  people  of 

Ohio  saved,  in  the  single  year  1883,  $60,000,000  on  their 

internal  exchanges  only.     The  ton  mileage  of  New  York 

and  Ohio  combined,  in  1883,  was  as  follows  on  all  the  roads 

reporting  in  each  State: 

New  York,  tons  I  mile 

Ohio. 


Total 


9,286,216,628 

8.577.357.803 


17.863,574.431 
$74,549,343 


Saving  in  New  York  as  compared  to  gold  rate  of  1870 

Saving  in  Ohio,  as  compared  to  gold  rate  of  1869        .         .         .        89,400,000 

Total        ......    $163,949,343 

The  reports  of  these  two  States  covered  about  four  tenths 
of  the  total  ton  mileage  of  the  whole  country  in  1883,  which 
was  42,361,068,260  tons  carried  one  mile  at  a  charge  of 
$549,339,736.  As  great  a  reduction,  or  even  greater,  has 
been  made  on  all  roads  which  were  in  existence  from  1866 
to  1870,  while  the  new  roads  have  worked  a  yet  greater 
saving,  because  they  take  the  place  of  traffic  by  wagons  or 
by  rivers.  At  the  ratable  difference  made  on  the  New 
York  and  Ohio  railways,  the  traffic  of  the  whole  country 
in  1883,  which  was  done  for  the  sum  of  $549,339,736, 
would    have    cost    $950,000,000,   or     $400,000,000    more. 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    253 

As  we  go  back  to  the  yet  higher  rates  of  1866,  '6^^  and 
'68,  the  difference  rises  to  $6oo,CX)0,ooo  ;  if  we  compare  the 
gold  rates  now  with  the  currency  rates  then,  the  difference 
is  yet  more — even  more  than  $800,000,000. 

Again,  I  call  attention  to  this  as  the  true  source  of  our 
increased  power  of  subsistence — as  the  main  source  of  our 
actual  increase  in  capital,  and  also  the  source  whence  has 
come  the  fund  for  railway  construction.  Only  a  small  part 
of  this  fund  has  been  wasted  ;  the  speculative  enterprises  by 
which  parallel  lines  have  been  built  too  near  to  existing 
lines  ever  to  be  of  any  value  are  limited  to  a  few  which  any 
one,  who  is  familiar  with  names,  can  identify.  By  far  the 
larger  portion,  even  of  the  forty-per-cent.  extension  in  four 
years*  time,  will  ultimately  justify  their  existence,  and  will 
be  sustained  with  a  moderate  income  on  a  cash  cost  ;  but 
the  day  of  profit  on  two,  three,  or  four  dollars  of  security 
issued  for  one  paid  in,  has  passed,  let  us  hope,  forever. 

These  tables  could  be  extended  to  almost  any  extent ;  all 
the  great  lines  show  identical  results,  but  it  would  be  useless 
to  multiply  proofs.  Suffice  it,  that  whatever  may  have  been 
the  intention  of  the  promoters  of  these  enterprises,  and  to 
whatever  extent  they  may  have  misled  the  investors  who 
have  risked  their  money  in  order  to  gain  speculative  profits 
— whatever  proportion  of  the  securities  may  be  cash  or  water, 
— the  competition  not  only  of  railway  with  railway  but  also 
of  product  with  product,  has  forced  the  charge  for  transpor- 
tation to  the  lowest  point  consistent  with  any  profit  what- 
ever, even  on  the  strongest  lines  and  on  those  which  have 
been  called  the  greatest  monopolies.  These  dry  and  vol- 
uminous statistics  are  presented  with  an  assurance  that  they 
will  be  honestly  considered,  and  will  lead  men  to  beware  of 
meddlesome  legislation  affecting  the  most  beneficent  force 
by  which  a  good  subsistence  is  made  common  to  all  at  the 
least  cost. 


254    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

In  what  follows  I  shall  be  obliged  to  repeat  some  of  the 
data  already  given,  in  order  to  sustain  the  distinct  and 
separate  purpose  of  the  remainder  of  this  essay. 

In  connection  with  the  foregoing  figures  I  have  been 
asked  to  give  my  views  of  the  future  immediate  prospects 
of  business  in  this  country.  What  are  such  views  worth? 
For  any  immediate  application,  absolutely  nothing.  Ask 
the  apple-woman  what  apples  will  be  worth  next  autumn, 
and  her  views  may  be  worth  as  much  for  any  immediate 
application  as  those  of  the  most  sagacious  banker  or  mer- 
chant in  the  city.  But  a  few  facts  may  be  given  which  have 
a  bearing  on  the  course  of  business  during  the  next  five 
years.  I  will  give  them  for  what  they  are  worth,  and  every 
reader  can  draw  his  own  deductions  from  them.  Such  facts 
may  only  be  of  use  in  estimating  industrial  forces  covering  a 
considerable  period.  The  facts  which  caused  the  panic  of 
1873  were  just  as  apparent  in  1870  as  they  were  during  its 
action,  but  its  exact  date  could  not  be  foreseen.  The  long 
period  of  necessary  depression,  while  the  depreciation  of 
the  currency  was  being  corrected,  could  be  as  clearly  appre- 
hended before  1873  as  it  could  be  during  its  continuance 
until  1879.  The  **boom  **  of  1880  was  an  obvious  necessity, 
and  was  easily  predicted  in  1878  and  '79.  The  commercial 
"  paralysis  "  of  1883,  ^r^^  the  railway  panic  ensuing  in  1884, 
were  both  apparent  and  were  foretold  in  the  winter  of  1881, 
although  no  date  could  be  established  in  advance.  With 
equal  certainty  the  commercial  activity  of  the  near  future, 
and  the  exceeding  prosperity  which  must  ensue,  may  be 
predicated  on  existing  conditions,  were  it  not  for  two  un- 
certain factors.     These  are : 

First,  The  silver  question. 

Second,  Uncertainty  in  regard  to  the  future  financial 
policy  of  the  Government. 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.     255 

In  respect  to  the  first  there  is  still  time  to  prevent  the  de- 
basement of  the  standard  of  value  to  the  level  of  a  dollar 
of  light  weight,  worth  but  little  more  than  eighty  cents  in 
gold  ;  but  every  year's  delay  will  bring  the  country  nearer 
to  the  inevitable  disaster  which  must  ensue  from  our  exist- 
ing acts  of  legal  tender  and  coinage. 

In  respect  to  the  second  danger  a  few  months  will  tell ; 
in  the  meantime,  constructive  enterprise  will  wdiit  the  decision 
of  the  people  as  to  whether  their  policy  shall  be  one  of 
peace,  prosperity,  reduced  taxation,  and  recuperation  ;  or 
one  of  uncertainty,  probable  aggression,  possible  war,  and  of 
the  perversion  of  the  functions  of  government  to  purposes 
of  personal  ambition  and  private  gain.  What  effect  a 
temporary  cessation  of  constructive  enterprise  exerts  will  be 
fully  treated  hereafter.  Assuming  that  both  these  special 
causes  of  disaster,  of  want  of  confidence,  and  of  continued 
depression  may  be  avoided,  a  period  of  great  future  pros- 
perity may  be  predicated  on  present  conditions,  although 
no  man  can  tell  when  the  exact  turn  of  the  tide  will  come. 

In  order  to  comprehend  the  present  conditions  under 
which  this  country  is  now  making  greater  real  progress  in 
material  welfare  than  at  almost  any  previous  period  in  its 
history,  certain  elements  must  be  considered  in  their  rela- 
tive proportions  ;  for  this  purpose  some  figures  of  the  census 
may  be  used.  In  respect  to  these  figures  it  must  be 
premised  that  the  valuation  of  farms  is  probably  under-esti- 
mated, that  the  capital  in  railways  included  the  "water" 
which  is  now  being  squeezed  out,  and  that  the  capital  in 
manufactories  was  probably  over-estimated.  In  considering 
the  relation  of  proportion  which  these  great  branches  of 
industry  bear  to  each  other  we  may  therefore  assume : 

First,  That  the  proportion  of  the  national  capital  in  im- 
proved lands  and  farm  buildings,  i.  e.,  in  the  instrumentality 
of  primary  production,  is  herein  stated  too  low. 


256    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

Second,  That  the  capital  in  manufacturing,  L  e.,  in  the 
instrumentah'ty  of  conversion  of  crude  materials  into  finished 
goods,  and  the  capital  in  railways,  i.  e.,  in  the  chief  instru- 
mentality for  distribution,  are  herein  stated  too  high  ;  but 
that  the  figures  of  the  census  fairly  represent  their  relation 
or  proportion  to  each  other. 

Omitting  fractions,  the  respective  capitals  in  these  three 
great  departments  of  industry  were,  in  1880,  as  follows,  as 
given  in  the  census  : 

Farm  lands  and  farm  buildings         .         .         .         .     $10,200,000,000 

Railways ♦.         5,200,000,000 

Manufacturing  (listed  under  332  different  heads)    .        3,000,000,000 

Graphically  represented,  the  relative  proportion  of  these 
capitals  is  as  follows : 


Farms 

Railways 

Manufacturing^ 


It  will  be  observed  that  the  valuation  of  the  farms  in- 
cludes the  land  ;  if  we  separate  farm  buildings,  machinery, 
tools,  and  appliances  from  land — that  is  to  say,  separate  all 
the  actual  capital  upon  the  farm  from  the  land,  and  add  this 
sum  to  the  capital  in  manufactures,  the  total  productive 
capital,  in  both  agriculture  and  manufactures,  was  about  the 
same,  perhaps  a  little  more,  than  the  single  capital  in  rail- 
ways. This  brings  into  the  clearest  light  the  relative  im- 
portance of  distribution.  In  this  country  there  is  always 
enough  for  all,  but  where  is  it  "^  Our  productive  capacity  is 
unlimited,  and  the  main  question  is  one  of  distribution. 
The  railroad  has  solved  a  part  of  this  problem,  but  there  are 
more  complex  questions  yet  to  be  solved.  It  costs  a  third 
of  the  price  of  a  baker's  loaf  to  get  a  loaf  of  bread  away 
from  the  oven,  after  it  is  baked,  to  the  mouth  of  the  con- 
sumer.    [See  Appendix  I.] 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.   257 

Such  being  the  relative  proportions  of  capital  in  farnning, 
manufacturing,  and  railways  in  1880,  what  changes  have  oc- 
curred since,  by  which  we  may  in  part  account  for  the  great 
variations  in  the  market  value  of  either  class  of  the  above 
property  ?  especially  the  reduction  in  the  nominal  value  of 
railway  property?  How  can  we  account  for  the  railway 
panic,  for  the  great  private  losses,  and  for  the  redistribution 
of  property  in  railways,  which  is  now  going  on?  How  can 
we  account  for  the  comparative  stability  in  the  value  of 
manufacturing  property  of  all  kinds,  and  for  the  relative 
and  actual  prosperity  of  agriculture,  the  latter  the  most 
important  factor  of  all  in  the  condition  of  the  country — 
the  one  great  fact  on  which  we  may  forecast  future  pros- 
perity ? 

The  reasons  are  not  far  to  seek.  At  the  foundation  of 
agriculture  lies  the  grain  crop.  Grain,  or  its  secondary  pro- 
ducts, meat  and  dairy  products,  constitute  the  principal 
elements  in  weight  of  the  tonnage  of  the  railways.  The 
average  grain  crop,  from  1866  to  1869,  inclusive,  was  1,400,- 
000,000  bushels.  The  average  railway  mileage  from  1866 
to  1869,  inclusive,  was  39,000  miles.  The  average  grain 
crop  from  1877  to  1880,  inclusive,  was  2,341,000,000  bushels. 
The  average  railway  mileage  from  1877  to  1880,  inclusive, 
was  83,000  miles.  The  average  grain  crop  of  188 1  to  1883, 
inclusive,  was  2,450,000,000  bushels.  But  our  railway  mile- 
age is  now,  or  was  on  the  1st  of  January,  1884,  over  121,000 
miles.  What  are  the  necessary  conclusions  from  these 
figures? 

From  1866  to  1880  one  line  after  another  was  added  to 
the  great  through  lines  from  East  to  West ;  slowly  but 
surely,  down  to  1880,  the  railway  mileage  gained  a  little 
upon  the  grain  crop,  the  slight  excess  representing  nothing 
more  than  the  necessary  cross-roads  and  side-lines.     The 


258   THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC. 

markets  of  the  world  also  kept  even  pace,  increasing  supply 
of  grain  and  meat  was  met  by  increasing  demand,  down  to 
1880  inclusive.  In  1869  thirteen  tons  of  produce,  already 
listed,  were  worth  in  gold  in  the  city  of  New  York,  $632.68  ; 
in  1880  the  same  quantities  were  worth  $631.32.  But  in 
1880  the  increase  of  demand  culminated  ;  exports  have 
fallen  off  about  as  fast  as  the  home  demand  has  increased, 
yet  the  same  quantities  of  the  same  articles  are  worth  at 
this  time  (June  15,  1884)  $621.75,  or  less  than  two  per  cent, 
reduction.  Observe,  however,  with  only  five  per  cent,  in- 
crease in  the  average  crop  of  grain  since  1880,  we  have  more 
than  forty  per  cent,  increase  in  the  railway  mileage  in  the 
last  four  years.  We  have  two  through  lines  where  one  is 
needed,  and  the  end  of  speculative  construction  is  therefore 
plainly  to  be  seen.  We  have  passed  through  the  period  of 
railroad  inception  and  of  detached  sections  or  lines,  through 
the  period  of  consolidation,  through  the  period  of  needed 
extension,  through  the  period  of  the  speculative  promotion 
of  useless  parallel  lines  by  means  of  construction  companies ; 
and  we  have  7ioiv  at  last  reached  the  period  of  adjustment 
to  wholesome  conditions  and  of  construction  limited  to  the 
necessity  for  cross-roads,  side-lines,  and  special  or  local 
roads  for  the  use  of  small  districts.  Even  this  latter  need 
will  probably  require  this  year  4,000,  afterward  5,000  to 
6,000  miles,  to  be  added  to  our  mileage  every  year. 

But  while  this  vast  extension  in  railway  mileage  has  been 
in  progress,  the  freight  charges  on  all  the  railways  of  the 
country,  and  especially  on  the  through  lines,  were  reduced 
between  1869  and  1880  tzvo  thirds;  that  is  to  say,  the 
charge  on  the  thirteen  tons  carried  from  West  to  East  1,000 
miles,  which  was  over  $180  in  1869,  was  less  than  $60  in 
1880,  and  has  since  fluctuated  but  little,  sometimes  a  little 
less,  sometimes  a  little  more.     In  fact,  there  can  hereafter 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    259 

be  no  further  great  reduction  in  freight  charges.  The  bot- 
tom was  reached  in  1880;  the  entire  profit  on  the  whole 
tonnage  of  the  New  York  Central  and  Hudson  River  Rail- 
road, in  1882,  was  but  a  trifle  over  one  eighth  of  a  cent  a 
ton  per  mile.  In  exact  figures  it  was  .1370  cents  per  ton 
per  mile.  That  is  to  say,  at  the  average  rate  of  profit  on 
the  whole  trafific,  grain  and  flour  being  carried  at  much 
lower  relative  rates,  the  actual  profit  in  1882  for  moving  a 
barrel  of  flour  i,0(X)  miles,  or  from  Chicago  to  New  York, 
was  thirteen  cents^  or  about  one  third  part  of  the  cost  of  the 
barrel  in  which  the  flour  is  packed.  In  1880  the  possibility 
of  any  further  permanent  reduction  on  established  lines  of 
railway  therefore  ended,  until  some  new  invention  shall  re- 
duce the  cost  of  the  service.  So  far  as  parallel  or  competing 
main  lines  have  been  constructed  since  that  date  the  capital 
expended  has  been  utterly  wasted. 

The  elimination  of  what  has  been  called  "  watered  stock 
and  bonds,"  which  cannot  affect  the  charge  for  transpor- 
tation in  any  manner,  is,  therefore,  in  process  of  accom- 
plishment by  methods  far  more  potent  than  any  possible 
legislative  acts,  namely,  by  the  triple  competition  to  which 
railways  are  subjected :  First,  The  competition  of  water- 
ways ;  Second,  The  competition  of  one  railway  with  an- 
other; Third,  The  competition  of  product  with  product 
in  the  great  markets  of  the  world.  The  charge  which  can 
be  put  upon  the  wheat  of  Dakota  or  Iowa  for  moving  it  to 
market  is  fixed  by  the  price  at  which  East  Indian  wheat  can 
be  sold  in  Market  Lane.  The  railway  mileage  Jan.  i,  1880 
(when  the  possibility  of  any  further  reduction  in  freight 
charges  covering  any  profit  whatever  commensurate  with  a 
fair  but  very  low  revenue  was  practically  reached),  was  86,- 
497,  represented  by  over  $5,000,000,000  of  securities.  Jan. 
I,  1884,  it  was  121,542  miles,  represented  by  over  $7,000,- 


26o    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

ooo,coo  of  securities.  Since  Jan.  i,  1880,  we  have  increased 
our  population  twelve  a7id  a  half  \o  fourteen  per  cent.,  our 
grain  crops  five  per  cent.,  our  railway  mileage  forty  per 
cent.  Aside  from  grain,  the  increased  production  of  other 
commodities  has  probably  not  averaged  a  greater  rate  than 
the  increase  in  population. 

Having,  therefore,  reached  the  end  of  construction  com- 
panies, of  speculative  building,  and  of  the  issue  of  two, 
three,  or  four  dollars  of  security  for  one  dollar  actually  paid, 
we  are  now  entering  upon  a  period  of  railway  adjustment; 
that  is  to  say,  of  earnings  limited  to  a  moderate  rate  of  possi- 
ble dividend  on  what  the  needed  portion  of  the  present 
railroad  mileage  would  cost  at  the  present  actual  prices 
of  labor  and  materials,  unnecessary  parallel  roads  being 
deprived  of  all  earning  capacity. 

How  much  nominal  property  will  be  wiped  out  of  exist- 
ence, and  how  many  individuals  will  suffer,  it  matters  not, 
except  to  the  sufferers.  Hereafter,  the  people  of  the 
United  States  will  be  served  by  120,000  miles  of  railway, 
operated  at  the  lowest  possible  cost,  and  which  will  be 
extended  only  so  fast  as  prudence  or  necessity  may  require. 
This  service,  which  would  have  cost  producers  or  consumers 
$1,000,000,000  gold  to  $1,350,000,000  currency  a  year  at  the 
rates  which  were  charged  from  1866  to  1869  inclusive,  is  now 
performed  for  about  $550,000,000  per  year,  a  saving  of 
$450,000,000  to  $800,000,000  per  year. 

While  this  revolution  has  been  accomplished,  the  leading 
farm  products,  of  which  I  have  given  a  list,  thirteen  tons  in 
all,  which  were  worth  in  gold  coin  in  the  city  of  New  York 
in  1869  $632.68,  and  which  are  now  worth  $621.75,  have 
averaged  during  the  whole  series  of  years  $679.50.  In  this 
period  of  so-called  depression  and  disaster  it  therefore 
appears  that  the  prices  of  the  staple  products  of  our  Western 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.   26 1 

farme  and  of  our  Eastern  dairies  in  New  York  are  but  eight 
per  cent,  lower  than  the  average  of  the  last  fifteen  years. 
Upon  the  misfortunes  of  railway  owners  we  may,  therefore, 
predicate  the  past  and  present  and  also  the  future  prosperity 
of  the  farmer  ;  and  upon  the  prosperity  of  the  farmer  we 
may  also  assume  the  future  prosperity  of  the  manufacturer, 
because  their  interests  are  identical.  Another  fact  must 
also  be  considered:  during  the  period  under  consideration 
the  mechanism  of  distribution  has  not  only  been  increased 
in  this  wonderful,  measure,  accompanied  by  the  vast  increase 
of  crops,  but  the  increase  of  crop  has  been  much  greater 
than  the  increase  of  population.  In  1869  the  production 
of  grain  was  about  forty  bushels  per  capita,  in  1884  it  was 
more  than  fifty-two  bushels,  an  increase  of  thirty  per  cent. 
If  the  general  product  of  agriculture  may  be  represented 
by  the  grain  crop,  if  follows  that  where  the  result  of  farm 
labor  worth  $632.68  in  1869  represented  a  given  amount 
of  labor,  in  1884  it  represented  only  about  two  thirds  as 
much. 

At  the  risk  of  unnecessary  repetition,  let  me  again  call 
attention  to  the  salient  facts  in  respect  to  the  State  of  Ohio 
which  are  disclosed  in  the  admirable  reports  of  her  railway 
commissioner.  I  again  call  attention  to  these  points,  be- 
cause from  them  the  restoration  of  value  to  many  lines  of 
railroad  now  embarrassed,  may  be  implied.  This  State  lies 
midway  between  East  and  West.  In  1883  it  contained  6,897 
miles  of  railroad,  against  3,324  in  1869.  In  1869,  the  actual 
tons  moved  over  all  the  railways  reporting  in  the  State 
numbered  14,559,704,  of  which  fifty-five  percent,  represented 
local  traffic  and  forty-five  per  cent,  through  traffic.  In  1883, 
63,683,423  tons  were  moved,  of  which  sixty-six  and  one-half 
per  cent,  represented  local  traffic  and  only  thirty-three  and 
one-half  per  cent,  through  traffic,  showing  how  the  local 


262    THE  RAILWAY,   THE  FARMER,  ANt)    THE  PUBLIC. 

traffic  gains,  both  absolutely  and  relatively.  The  clfarge 
per  ton  per  mile  in  1869  was  2.446  cents;  in  1883,  only  .875 
cents  per  ton  per  mile.  Graphically  the  Ohio  railroad 
traffic  may  be  represented  in  this  way : 


TONS    MOVED. 


i86g 
»4.559,704 

Local 
Through 

1883 
63^683,423 

Local 
Through 


CHARGE   PER   TON    PER   MILE. 


1869         2-446 
X883  .875 


The  actual  freight  charge  on  all  the  railroads  reporting  in 
Ohio  in  1883  was,  in  round  figures,  $67,000,000.  Had  this 
traffic  been  subjected  to  the  charge  of  1869  the  sum  would 
have  been  $201,800,000. 

The  difference  between  these  two  sums  is,  in  currency, 
$134,800,000;  in  gold,  $89,400,000.  Now  since  two  thirds 
of  this  traffic  was  local  traffic,  the  saving  in  rates  to  the 
people  of  Ohio  since  1869,  on  their  local  traffic  only,  was,  in 
currency,  $90,000,000  ;  in  gold,  $60,000,000. 

This  is  the  difference  on  the  work  done  in  a  single  year 
in  a  single  State !  The  commissioner  may  well  say  in  his 
letter  to  me  transmitting  this  information,  ''  I  am  glad  to 
say  that  in  Ohio  the  people  and  the  railways  are  at  peace." 
The  example  of  Ohio  is  a  crucial  instance  of  how  the  rail- 
ways have  diversified  the  employment  of  the  people,  and 
how  this  very  diversity  afterward  sustains  the  railways,  as 
the  local  traffic  steadily  increases  in  its  relative  proportion. 
If  such  has  been  the  gain  in  a  single  State — $60,000, 000  saved 
on  the  local  traffic  of  a  single  year,  as  compared  to  the  rate 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    263 

of  only  fourteen  years  since — the  secret  of  increasing  wealth, 
lower  rates  of  interest  on  capital  and  increasing  wages  to 
the  laborer,  is  not  far  to  seek.  Nor  can  depression  or 
adversity  long  hold  a  place  under  such  conditions,  given 
only  stability  to  the  standard  of  value,  judicious  reduction 
of  taxes,  freedom  from  an  aggressive  foreign  policy,  and  the 
limitations  of  legislative  action  to  assuring  the  publicity  of 
the  accounts  of  public  corporations,  without  futile  attempts 
to  control  them. 

But  to  return  to  the  adjustment  of  the  value  of  railway 
property.  Stocks  and  bonds,  nominally  representing  $7,000,- 
000,000  worth  of  property,  apparently  depreciated  at  least 
$1,500,000,000  within  the  year  1884,  or,  in  other  words 
perhaps  $1,000,000,000  of  '*  water  "  was  squeezed  out, 
and  during  the  process  the  true  value  of  the  remainder 
has  been  temporarily  depressed  $500,000,000,  from  which 
depression  it  must  soon  recover.  Such  vast  changes,  of 
which  the  conspicuous  frauds  of  a  few  persons  are  but  the 
surface  indications  (the  greatest  knaves  not  having  even  yet 
been  ruined),  could  not  fail  to  affect  in  a  most  profound  de- 
gree all  banks  and  other  institutions  of  credit,  and  in  less 
measure  all  who  engaged  in  production  and  distribution. 
And  yet  no  tradesman,  no  merchant,  no  manufacturer  has 
yet  failed  who  had  not  long  been  insolvent,  and  hardly  a 
banker  ;  the  prices  of  the  staple  farm  products  are  almost 
the  same  as  in  1869  and  in  1880,  the  latter  a  year  of  great 
prosperity,  and  there  have  been  few  manufacturing  accounts 
made  up  which  showed  an  actual  loss,  while  many  branches 
of  business  are  prosperous.  There  is  no  safer  barometer 
than  the  production  and  consumption  of  iron.  This  branch 
of  industry  has  been  said  to  be  more  depressed  than  almost 
any  other  ;  but  what  are  the  facts?  According  to  the  records 
of  the  Secretary  of  the  Iron  and  Steel  Association,  the  pro- 


264    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

duction  of  pig-iron  in  the  last  five  years,  which  included 
the  "  boom  "  year  1879,  was  as  follows : 

NET  TONS. 

1879 3.070.875 

1880 4,295,414 

I88I 4,641.564 

1882 5.178,122 

1883 5.146.972 

Let  it  be  observed  that  in  the  face  of  lower  and  lower 
prices,  from  1880  to  the  present  time,  and  in  spite  of  a  re- 
duction of  nearly  one  half  in  the  rails  laid  upon  new  rail- 
roads in  1883  as  compared  to  1882,  the  production  and  con- 
sumption of  American  iron  in  the  year  of  so-called  greatest 
depression,  1883,  was  sixty-six  per  cent,  greater  than  in  the 
"  booming  "  year,  1879.  ^^^  consumers  of  iron  may  well 
be  satisfied  with  the  construction  of  modern  furnaces  well 
placed,  in  which  iron  is  made  at  so  much  lower  cost  that,  in 
the  face  of  eleven-per-cent.  reduction  in  the  price  of  1880, 
the  production  of  the  metal  which  is  at  the  foundation  of 
all  arts  has  increased  twenty  per  cent.  On  such  depression 
as  this  future  prosperity  may  well  be  predicated.  In  1880 
the  average  price  of  anthracite  foundry  pig-iron,  in  Phila- 
delphia, was  $28.50  per  ton  of  2,240  pounds  ;  in  1883,  $22.37, 
and  it  is  now  about  $20.  The  prices  of  1883  were  eleven 
per  cent,  less  than  in  1880;  the  production  was  twenty  per 
cent,  greater. 

Pig-iron  assumes  great  importance  as  a  producing  inter- 
est, and  it  is  often  claimed  that  depression  in  this  branch  of 
industry  is  always  accompanied  by  depression  in  all  others  ; 
but  this  assumption  is  putting  the  cart  before  the  horse. 
When  depression  in  the  iron  industry  is  caused  by  any  gen- 
eral check  to  the  consumption  of  iron,  it  surely  indicates 
wide-spread  depression  elsewhere  ;  but  when  depression  in 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    265 

particular  iron  districts  is  accompanied  by  such  activity  in 
others  that  the  aggregate  production  increases,  it  merely 
indicates  survival  of  the  fittest — the  substitution  of  new  and 
well-placed  furnaces  for  old  and  misplaced  ones — lower  cost 
of  production,  higher  wages  for  more  effective  work ;  in 
short,  an  adjustment  to  new  conditions  corresponding  to 
the  process  which  is  affecting  railroads.  As  a  producing  in- 
terest the  iron  industry  is  of  very  slight  relative  importance. 
The  whole  force  of  men  and  boys,  who  were  employed 
in  the  census  year  in  the  production  of  about  4,000,000 
tons  of  iron,  consisted  of  about  20,000  engaged  in  mining 
coal  for  the  use  of  blast  furnaces,  32,000  in  mining  iron  ore, 
42,000  in  blast  furnaces,  and  perhaps  enough  more  in  sub- 
sidiary employments  to  make  up  100,000  in  all.  In  the 
present  year,  1884,  railroad  construction  may  not  exceed 
4,500  miles,  against  11,591  in  1882,  or  a  falling  off  of  7,000 
miles,  which  represents  a  reduction  in  the  demands  for  rails 
only  of  about  700,000  tons,  and  of  iron  for  other  railroad 
use  about  300,000,  or  1,000,000  tons  in  all  ;  yet  there  is  no 
falling  off  in  the  production  of  iron  even  approximating 
such  figures,  therefore  the  general  consumption  has  vastly 
increased,  while  the  railway  consumption  has  decreased. 

The  next  consideration  upon  which  future  prosperity  may 
be  predicated,  sooner  or  later,  is  the  demand  which  our  in- 
creasing population  must  make  on  existing  instrumentalities 
of  production  and  distribution.  Agriculture  is  now  pros- 
perous. The  railway  system  is  in  process  of  adjustment  to 
new  and  sounder  conditions.  Of  manufactured  goods  there 
seems  to  be  a  moderate  excess,  but  it  is  generally  believed 
that  if  this  stock  were  distributed  in  the  usual  way  on  the 
shelves  of  the  dealers,  and  had  not  been  permitted  or  forced 
to  accumulate  on  the  hands  of  the  producers,  it  would  bear 
no  appearance  of  excess..    It  is  the  waiting  for  events,  the 


266    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

question,  "  What  next  ?  "  that  has  for  a  little  time  checked 
the  customary  circulation  of  goods,  and  has  caused  what 
was  named,  when  it  was  predicted  a  year  and  a  half  since, 
a  temporary  '^commercial  paralysis."  This  paralysis  has 
been  finally  caused  by  what  a  president  of  one  of  the  sound- 
est banks  in  New  York  has  well  named  "  a  moral  panic,"  to 
distinguish  it  from  an  ordinary  commercial  or  financial 
panic.  When  will  this  paralysis  end  ?  No  one  can  tell, 
but  we  may  measure  the  demand  which  our  present  increase 
of  population  at  the  rate  of  nearly  or  quite  2,000,000  persons 
a  year  must  make  upon  the  existing  instrumentalities  of 
production  and  distribution,  and  perhaps  we  may  then,  at 
least,  venture  to  guess  when  the  whole  procession  of  the 
trades  will  move  on. 

Let  it  be  assumed  that  within  a  year,  more  or  less,  we 
shall  have  reached  a  state  of  equilibrium  somewhat  similar 
to  that  of  1880,  when  all  existing  railways  were  fairly  well 
employed,  all  manufacturing  establishments  fairly  well  ad- 
justed to  the  then  existing  demand,  and  all  farmers  of  in- 
telligence were  prospering.  Under  such  conditions,  it  of 
necessity  ensues  that  for  each  child  born  one  adult  must 
seek  a  new  place  of  shelter,  and  each  immigrant  family  must 
be  housed  ;  for  each  family  of  five,  one  new  cotton-spindle 
must  be  set  in  motion  ;  a  half  a  ton  additional  of  iron  must 
be  made  ;  thirty  or  forty  additional  pounds  of  wool  must  be 
converted  into  cloth  ;  and  all  other  branches  of  productive 
industry  must  be  increased  by  the  addition  of  new  capital, 
/.  e.y  new  machinery,  new  tools,  and  new  appliances.  At 
the  same  time,  the  railway  mileage  must  be  increased  in  the 
ratio  of  not  less  than  6,000  miles  a  year  to  serve  the  cross- 
way  trafific  of  the  existing  population  and  to  open  new  fields 
for  the  increase. 

This  is  the  kind  of  constructive  enterprise,  having  refer- 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    267 

ence  to  increasing  and  to  future  needs,  which  is  subject  to 
great  variations  and  to  vastly  greater  fluctuations  than  the 
.mere  subsistence  of  an  existing  population.  The  work  of 
subsistence  must  go  on,  and  must  always  give  constant  em- 
ployment to  by  far  the  greater  part  of  the  population.  We 
are  always  within  less  than  one  year  of  starvation,  and 
within  two  or  three  years  of  being  naked.  In  supplying 
these  daily  wants,  work  must  be  constant  ;  but  constructive 
enterprise  may  vary  fifty  per  cent,  at  one  period  compared 
to  another,  and  that  lesser  portion  of  the  population  which 
must  be  engaged  in  construction  in  any  decade  may  be 
pressed  to  the  utmost  for  six  to  seven  years,  and  then  be 
half  out  of  work  for  three  to  four,  during  which  period  of 
cessation  the  enterprising  ones  betake  themselves  to  new 
land.  We  may  approximately  measure  this  constructive 
force.  We  numbered  50,000,000  in  1880.  The  abnormal 
increase  by  immigration  added  to  the  natural  increase  gives 
us  now  57,000,000,  June  30,  1884.  We  are  probably  increas- 
ing now  at  the  rate  of  2,000,000  a  year.  Let  it  be  assumed 
that  a  condition  of  equilibrium  may  be  reached  January  i,  or 
by  July  1, 1885,  that  railways  are  then  adjusted,  manufacturers 
fairly  employed,  and  agriculture  prospering,  what  construc- 
tion will  become  necessary  to  establish  the  capital  necessary 
for  sheltering,  clothing,  furnishing  with  tools,  and  moving 
the  products  of  2,000,000  people?  It  will  be  observed  that, 
whatever  the  measure  of  this  demand  may  be,  it  will  be 
wholly  a  new  demand  for  labor.  The  bricks  must  be  made, 
the  timber  must  be  cut,  the  ore  must  be  mined  and  smelted, 
the  people  must  be  housed  and  furnished  with  machinery 
and  tools,  before  they  can  even  begin  to  sustain  themselves 
and  to  produce  for  themselves  the  daily  subsistence  which 
they  will  require. 

All  existing  capital  being  balanced  to  the  need  of  an  ex- 


268    THE  RAIL  WA  V,   THE  FARMER,  AND    THE  PUBLIC. 

isting  population,  the  first  demand  of  additional  population 
is  for  new  capital  to  be  saved  and  invested,  all  capital  being 
a  concrete  form  of  labor  saved  for  future  use.  We  mayj 
therefore,  convert  the  capital  required  by  2,000,000  people 
by  way  of  terms  of  money  into  men's  labor;  that  is  to 
say,  if  any  are  now  idle  how  soon  will  constructive  enter- 
prise require  all  their  work  and  a  great  deal  more? 

First,  Shelter.  Can  the  average  demand  of  each  new 
family  of  five  persons  for  shelter  be  fixed  at  any  less  than  a 
house  or  part  of  a  house,  costing  $500,  to  each  family,  or 
$100  per  person  ?  The  poorest  New  England  factory  tene- 
ment costs  more  than  this,  but  in  the  South  shelter  costs 
less.  If  this  is  the  lowest  measure,  the  provision  for  the 
shelter  of  2,000,000  people  will  cost  $200,000,000.  That  is  to 
say,  this  sum  of  money  must  be  paid  for  the  conversion  of 
trees,  clay,  and  ore  into  houses.  The  average  earnings  of 
all  who  are  engaged  in  these  branches  of  work  are  not  less 
than  $400  per  year,  at  which  rate  this  sum  measures  a  de- 
mand for  the  work  of  500,000  wood-cutters,  brick-makers, 
metal-workers,  artisans,  and  mechanics.  If  $500  per  family 
of  five  persons  is  too  much,  the  furnishing  of  the  house  may 
be  included. 

Second,  Railroads.  The  next  great  provision  to  be  made 
is  for  the  construction  of  new  railroads.  This  year  we  may 
reduce  to  4,000  miles,  but  soon  the  average  must  go  up  to  at 
least  6,000  miles.  If  6,000  miles  a  year  on  the  average  are 
needed,  they  will  cost  not  less  than  $25,000  per  mile  in  hard 
money  for  construction  and  equipment,  or  a  total  of  $150,- 
000,000.  The  men  who  do  this  work  are  laborers,  miners, 
metal-workers,  and  mechanics.  A  fair  average  of  their 
earnings  would  be  not  less  than  $350  per  year,  but  to  be 
conservative  we  may  use  $400  as  a  divisor,  and  then  this 
sum  measures  a  demand  for  the  work  of  375,000  men.     At 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    26c) 

five  to  the  mile,  which  is  now  a  fair  average,  30,000  men 
will  also  be  required  to  operate  the  new  railroads  after 
completion. 

Third,  ClotJiing  and  Iron.  In  order  to  supply  2,000,000 
with  cotton  and  woollen  cloth,  boots,  shoes,  and  hats,  and 
with  200  pounds  iron  per  head,  an  expenditure  in  new  fac- 
tories and  iron-works  of  not  less  than  $30,000,000  will  be 
needed,  and  at  $400  this  measures  a  demand  for  the  work 
of  75,000  men,  while  30,000  men,  women,  and  children  will 
be  needed  to  operate  the  works  after  they  are  constructed.' 

How  can  we  measure  the  capital  which  will  be  needed  in 
the  330  other  branches  of  manufactures  which  have  not  been 
named,  in  order  to  begin  to  provide  for  the  future  subsist- 
ence of  2,000,000  people?  It  cannot  be  done  with  accuracy, 
but  already  we  have  measured  a  demand  for  the  work  of 
1,000,000  of  the  existing  population  ;  and  of  this  work,  the 
provision  for  shelter,  clothing,  and  iron,  requiring  the  work 
of  600,000  persons,  is  absolutely  new  work  in  addition  to 
any  and  all  work  now  done.  How  many  capable  and  com- 
petent workmen  or  workwomen  are  there  now  out  of  em- 
ployment and  seeking  work  anywhere  ?  What  was  the 
greatest  number  in  the  most  depressed  period  after  1873? 
Is  not  all  the  common  talk  of  over-production  the  veriest 
nonsense,  when  within  one  or  two  years  from  any  given  date 
all  that  there  is  produced  must  be  used  in  making  prepara- 
tion for  increasing  wants,  while,  on  the  other  hand,  skilled, 
competent,  and  sober  laborers  never  lack  employment? 
This  country  cannot  stop.  The  greater  the  check  to  con- 
structive enterprise  now^  the  greater  the  activity  must  be  in 
one,  two,  or  three  years.  Who  shall  say  when  it  will  begin? 
You   may  ask  the  apple-woman.      Such  are  the    facts  of 

*  For  the  average  earnings  of  the  clashes  named,  reference  may  be  had  to  the 


270     THE  RAILWAY.  THE  FARMER,  AND    THE  PUBLIC. 

the  past  and  present.     Who  dare  forecast  the  immediate 
future? 

How  much  will  the  progress  of  this  country  be  hindered 
by  distrusl  of  politicians  who  are  not  statesmen,  and  by  the 
futile  attempts  of  ignorant  legislators  to  regulate  railway 
traffic  and  to  control  great  industrial  forces  by  means  of 
meddlesome  statutes  inconsistent  in  their  own  provisions, 
and  retarding  rather  than  promoting  the  welfare  of  the 
people?  Who  can  measure  the  iniquity  of  the  railway 
wreckers  who  have  used  their  power  for  nefarious  purposes 
— stolen  franchises,  cheated  their  stockholders,  and  per- 
verted the  most  powerful  and  beneficent  instrumentality 
ever  placed  at  the  disposal  of  man  to  the  basest  purposes ; 
and  who  have  made  it  possible  to  say  that  the  present  is 
''a  moral  panic,"  caused  by  the  want  of  honor  and  integrity 
among  those  who  had  secured  places  of  highest  trust  and 
responsibility?  The  riots  of  Cincinnati  had  their  origin  in 
the  perversion  of  justice  in  the  criminal  courts.  The  injury 
which  has  been  inflicted  by  the  perversion  of  the  civil 
courts  of  a  neighboring  State,  at  the  instance  of  men  who 
can  now  be  named,  may  some  time  culminate  in  a  remedy 
equally  disastrous,  but  by  which  the  wrong  will  be  remedied. 
When  courts  and  judges  are  corrupted,  men  fall  back  upon 
their  natural  rights,  and  remedy  their  wrongs  by  rougher 
methods  than  those  which  are  contemplated  by  law. 

It  would,  of  course,  have  been  impossible  for  me  to  have 
given  these  facts  had  not  the  railway  problem  possessed  a 
certain  fascination  which  has  lately  led  me  to  continue 
these  tables,  which  attracted  a  good  deal  of  attention  about 
four  years  since,  down  to  the  present  time.  These  tables 
are  now  placed  at  your  disposal,'  and  I  think  they  fully  sus- 

*  This  treatise  was  first  prepared  as  a  continuation  of  the  testimony  given  by 
the  writer  before  the  Senate  Committee  on  Labor,  to  be  included  in  their  final 
report. 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    2/1 

tain  the  position  which  I  have  taken,  to  wit :  that  railway- 
charges  were  reduced  to  the  lowest  possible  terms  about 
the  year  1880,  since  which  date  they  have  sometimes  been 
forced  below  the  cost  of  the  service;  and  that  when  the 
whole  traffic  of  two  great  States  like  New  York  and  Ohio  is 
performed  at  a  profit  of  a  quarter  of  a  cent  a  ton  per  mile, 
and  sometimes  for  much  less,  the  only  effect  of  legislative 
interference  would  be  fraught  with  danger,  unless  limited 
to  securing  publicity  of  accounts  and  a  board  of  friendly 
arbitration,  like  the  railway  commission  of  Massachusetts, 
whose  example  in  this  matter  has  been  followed  in  several 
other  States. 

In  conclusion,  a  few  words  may  be  added  upon  the  gen- 
eral principles  upon  which  progress  in  the  past  has  been 
based,  and  upon  which  it  may  be  predicated  in  the  future. 
What  effect  have  these  and  other  changes  had  upon  the 
mass  of  the  population  who  labor  for  wages,  and  whose 
daily  bread  depends  upon  their  daily  work  .^  All  profits, 
wages,  and  taxes  are  and  must  be  derived  from  the  con- 
version and  sale  of  the  annual  product,  /.  ^.,  from  the  pro- 
ducts of  each  succession  of  the  four  seasons.  The  money 
measure  of  this  product — that  is  to  say,  its  market  value,  is 
determined  directly  or  indirectly  by  its  competition  with 
other  like  products  in  the  great  markets  of  the  world.  The 
world  subsists  by  the  exchange  of  product  for  product,  and 
the  balances  are  settled  in  money  in  the  centres  of  ex- 
change, whether  national  or  international.  The  rates  of 
wages  are,  therefore,  a  result  corresponding  with  and  meas- 
uring the  share  which  the  workman  receives  from  the  sale 
or  exchange  of  the  product  on  which  he  has  spent  his  work. 

In  this  country,  the  most  effective  machinery  and  the 
most  versatile  and  intelligent  labor  are  applied  to  the  most 
ample  natural  resources  possessed  by  any  nation.      A  hu^e 


2/2    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

abundance,  therefore,  ensues  from  the  least  amount  of 
human  labor.  On  some  of  the  fattest  land  in  the  West  the 
measure  of  the  product  of  one  man  working  the  best  ma- 
chinery with  a  pair  of  horses  has  reached  one  hundred  ions 
of  corn  in  a  single  season.  The  aim  of  some  of  the  great 
"bonanza  wheat  farmers"  of  Dakota  has  been  to  apply 
machinery  so  effectively  that  the  cultivation  of  one  full 
section,  or  640  acres,  shall  represent  one  year's  work  of  only 
one  man.  This  has  not  yet  been  reached,  but  so  far  as  the 
production  of  the  grain  of  wheat  is  concerned  one  man's 
work  will  now  give  1,000  persons  enough  for  a  barrel  of  flour  a 
year,  which  is  the  average  ration.  One  man's  work  for  one 
year  sufifices  to  supply  500  people  with  the  largest  quantity 
of  iron  consumed  by  any  nation  on  the  earth.  The  work  of 
one  operative  in  a  wollen  or  cotton  factory,  or  in  the 
auxiliary  print-works  or  bleachery,  suffices  to  convert  cotton 
and  wool  into  textile  fabrics  for  250  or  more  of  the  most 
amply  clothed  people  in  the  world.  In  proportion  to  the 
increase  and  efficiency  of  capital,  a  less  number  of  laborers 
suffices  for  necessary  work,  wages  increase  in  amount,  and 
the  purchasing  power  of  each  dollar  of  the  earnings  of  the 
people  is  also  augmented. 

The  truth  of  the  fundamental  law  of  labor  is  historically 
sustained — to  wit:  that  high  rates  of  wages  of  the  highest 
producing  power  are  the  necessary  result  or  correlative  of 
the  low  labor  cost  of  production.  The  operative  of  to-day 
earns  twice  the  wages  in  ten  hours  that  the  operative  of  forty 
years  ago  could  earn  in  thirteen  hours  per  day.  By  the 
combined  force  of  more  adequate  capital  working  harmoni- 
ously with  more  intelligent  labor,  the  standard  of  a  good 
subsistence  is  raised,  the  cost  is  decreased,  the  hours  of  labor 
are  shortened,  and  the  struggle  for  life  is  rendered  less  and 
less  severe.      The  time  will  surely  come  when,  by  the  work- 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    273 

ing  of  these  great  forces  of  industry,  intelligence,  and  integ- 
rity, even  the  vision  of  the  mistaken  enthusiast,  who  seeks 
to  shorten  the  hours  of  work  by  meddlesome  statutes,  will 
be  realized,  and  when  eight  hours  of  average  work  per  day 
may  suffice  to  produce  an  ample  subsistence.  In  the  mean- 
time, the  demagogue  and  the  quack  will  mislead  honest  but 
mistaken  men,  and  will  endeavor  to  secure  position  and 
power  by  cheating  them  with  paper  money,  crippling  the 
railway  service  by  means  of  so-called  "anti-monopoly" 
statutes,  and  by  restricting  the  freedom  of  contract  by 
meddlesome  statutes  affecting  the  hours  of  labor  of  adult 
men  and  women,  which  retard  more  than  they  promote  the 
object  for  which  they  are  enacted. 

It  will  be  observed  that  the  increase  of  population  in  this 
country  is  subject  to  a  moderate  variation  from  a  uniform 
rate,  as  the  immigration  may  be  large  or  small;  and  that, 
conversely,  immigration  is  retarded  or  stimulated  by  the 
conditions  of  industry  and  of  constructive  work.  On  the 
other  hand,  while  the  aggregate  increase  in  railway  mileage 
has  been  vastly  greater  than  the  increase  in  population  since 
1865,  it  has  also  been  subject  to  very  much  greater  fluctua- 
tions. On  the  1st  of  January,  1865,  the  population  probably 
numbered  34,000,000.  On  the  ist  of  January,  1885,  it  will 
probably  number  58,000,000.  The  railway  mileage  on  the 
1st  of  January,  1865,  was  33,908.  Estimating  the  probable 
construction  of  the  present  year,  1884,  at  not  over  4,000 
miles  (possibly  5,000),  the  number  of  miles  January  I,  1885, 
will  be  a  little  over  125,000. 

The  following  diagrams  will  show  the  great  fluctuations, 
or  waves,  as  they  may  be  called,  in  the  construction  of  rail- 
roads and  in  the  consequent  employment  of  labor. 

Now  the  construction  of  a  railroad  represents  in  greater 
measure  than  almost  any  other  form  of  capital  a  given  and 


2/4    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 


sa 


^w 


§i 

*  2 


1^  2^  5  S-  ^  8  ? 

Sin  vo    ti  vo'  00    o\  rn 

W  M       «       « 

a 
u 


Sl^l     § 


CO   ■*■   ro  «    M 


wr^oif^oooo-* 
mci    mvo     O     •^^■^^..    t» 


O\om0    ooo    ixinfiN 

'rht^M      t^I^t^O      O      ►-      M 

•*(?»vo    o    MOO    M    w    t^r^ 


•*  VO     tv    lO    •<«•    N 


N     W     ro    ■«»-    t^    0« 


O    <A 


^ 


D0000000000000000000< 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    275 

measurable  amount  of  direct  human  or  manual  labor, 
coupled  with  but  a  moderate  application  of  labor-saving 
machinery  or  capital.  It  represents  more  than  almost  any- 
thing else  a  conversion  of  human  labor,  but  little  assisted 
by  capital  in  labor-saving  machinery,  into  one  of  the  most 
effective  forms  of  fixed  capital.  It  is  the  work  of  the  digger 
and  the  delver,  of  the  navvy,  the  track-layer,  and  the  wood- 
man who  cuts  the  ties,  as  well  as  of  the  iron-  and  coal-miner, 
the  smelter,  and  the  operative  in  the  rolling  mill,  supple- 
mented by  the  work  of  a  relatively  small  number  of 
mechanics  in  building  stations  and  equipment.  We  can 
only  reduce  the  construction  of  a  railway  to  terms  of  so 
many  men's  labor  for  a  given  period  in  a  very  broad  and 
general  way,  but  even  in  this  manner  we  may  make  an  ap- 
proximate estimate  of  the  force  employed  one  year  on  each 
mile.  If  we  assume  that,  without  paying  any  regard  to  the 
nominal  amount  of  security  issued,  each  average  mile  of 
railway  construction  has  cost  $25,000  in  gold,  this  sum 
represents,  or  might  be  converted  into,  50  men  for  one  year 
at  $500  each,  or  of  62.6  men  at  $400  each.  A  fairly  approxi- 
mate measure  of  the  number  employed  would  be  midway, 
or  56  men.  If  the  average  pay  is  less,  the  number  of  men 
will  be  greater  per  mile  per  year.  At  this  high  ratio  of 
wages,  the  force  employed  in  the  construction  of  railways 
has  varied  in  the  proportions  set  against  the  mileage  table 
in  the  preceding  diagrams.  I  use  intentionally,  in  this  case, 
a  high  average  rate  of  earnings  and  probably  a  low  money 
cost  per  mile,  in  order  not  to  exaggerate  the  number  of  men 
employed. 

Nothing  is  claimed  for  this  computation  except  that  it 
gives  an  approximate  indication  of  the  fluctuation  in  the 
demand  for  common  labor  which  ensues  from  the  activity  or 
the  increase  in  railway  construction.     It  may  be  admitted 


27^    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

that  some  labor-saving  contrivances  have  been  introduced 
in  this  branch  of  work  since  1865..  and  that  the  construction 
of  1883-4  would  represent  a  less  proportionate  number  of 
men  per  mile  at  higher  wages  than  in  1865,  when  the 
upward  wave  began  to  move,  or  in  1871,  when  the  first 
wave  began  to  recede;  yet  after  making  all  due  allowance 
for  this  variable  term,  railway  construction  remains  in  great 
measure  an  example  of  arduous  manual  labor  in  grading  the 
way,  piercing  the  tunnels,  levelling  the  hills,  cuttinp^  the  ties, 
and  in  mining  the  ores  and  coal  for  the  making  of  the  rails. 
It  is  almost  wholly  direct  human  labor.  The  variation  in 
this  demand  for  labor  cannot  have  been  less  than  from 
about  6o,ooo  men  in  1865,  up  to  400,000  in  1871,  down  to 
90,000  in  1875,  up  to  650,000  in  1883,  and  back  to  not  over 
280,000  in  1884,  even  if  we  exceed  the  estimate  in  the  table 
of  4,000  miles  and  actually  reach  5,000  miles  in  1884.  If  we 
build  only  4,000  then  the  demand  will  fall  to  224,000.  In 
this  example  we  have  an  extreme  case  of  the  dependence  of 
the  common  laborer  upon  the  continuation  of  constructive 
enterprise;  using  the  term  constructive  as  a  designation  of 
that  part  of  the  work  of  the  country  which  is  quite  distinct 
and  separate  from  the  necessary  work  of  providing  or 
moving  subsistence  for  a  given  or  fixed  population  at  a 
given  time.  The  subsistence  of  a  fixed  population,  and  the 
maintenance  of  existing  capital  or  instrumentality  of  pro- 
duction for  a  fixed  number  of  persons,  constitute  necessary 
work,  which  cannot  vary  or  fluctuate  in  any  great  measure, 
whether  "the  times,"  so  called,  are  "easy"  or  "hard." 
The  great  fluctuation  in  the  demand  for  labor  occurs  in  the 
demand  for  that  small  part  of  any  given  population  which 
is  or  should  be  customarily  employed  in  those  constructive 
enterprises  which  are  undertaken  either  for  the  purpose  of 
meeting  the  increasing  demands  or  "progressive  desires'* 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    27/ 

of  an  existing  population,  or  in  preparing  to  meet  the  abso- 
lutely necessary  wants  of  an  increase  of  the  population. 

Under  the  ordinary  or  normal  demand  of  a  time  of  long- 
continued  peace,  it  may  be  safely  assumed  that  at  least 
ninety  per  cent,  of  all  the  people  of  this  country,  who  are 
engaged  in  production  or  distribution  at  any  given  time, 
are  in  fact  employed  in  providing  or  distributing  the  neces- 
sary means  of  subsistence,  or  in  repairing  or  maintaining 
existing  capital,  or  in  keeping  up  the  condition  of  farms  to 
the  standard  of  that  time;  and  that  not  exceeding  ten 
per  cent,  are  or  can  be  employed  in  adding  to  the  capital 
or  wealth  of  the  country,  or  in  making  preparation  for 
housing  and  furnishing  the  next  year's  increase  of  people 
and  getting  them  ready  to  become  themselves  self-sustain- 
ing. According  to  the  census  of  1880,  the  total  number  of 
persons  who  were  occupied  in  the  production  or  distribution 
of  the  annual  product,  as  well  as  in  the  constructive  enter- 
prises, was  17,392,099. 

In  agriculture 7,670,493 

In  professional  or  personal  service      ....  4,074,238 

In  trade  and  transportation 1,810,256 

In  manufaciuring.  mechanical,  and  mining  industry  .  3,837,112 

17,392,099 
14,744,942  males,  2,647,157  females. 

If  the  proportions  which  I  have  adopted  are  approxi- 
mately correct — to  wit:  ninety  per  cent,  engaged  in  pro- 
viding necessary  subsistence  and  maintaining  existing  capi- 
tal ;  ten  per  cent,  engaged  in  constructive  enterprise  to 
meet  increasing  wants  and  an  increase  of  population,  then 
the  proportion  of  the  whole  number  in  each  department  of 
industry  would  be  : 

Class  I— Necessary  subsistence 15.652,899 

Class  2 — Constructive  work        .....     1,739,200 


2/8    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

But  it  will  be  observed  that  hard  times  increase  the 
number  engaged  in  agriculture  by  giving  some  kind  of 
occupation  to  those  who  are  thrown  out  of  other  employ- 
ment ;  we  must,  therefore,  treat  only  the  other  occupations, 
numbering  9,721,606;  or  we  may  assume  at  a  year's  later 
date,  when  the  **  boom  **  of  1880  ended  and  the  present 
depression  began,  the  number  was  10,000,000  persons  occu- 
pied otherwise  than  in  agriculture.  Of  this  number  we 
may  also  assume  that  the  work  of  9,000,000  could  not  cease 
and  has  not  ceased  even  in  the  worst  period  of  1883  and 
1884,  because  their  work  is  necessary  to  mere  existence; 
but  the  work  of  1,000,000  engaged  in  constructive  enter- 
prises, depended  wholly  upon  tJie  confidence  of  the  owners  or 
capitalists  in  the  future  progress  of  this  country.  It  is  this 
point  which  I  wish  to  bring  into  the  clearest  light.  There 
has  been  and  can  be  no  lack  of  capital.  In  1873  and  1883 
the  silly  cry  of  over-production  has  been  heard  in  the  land. 
Over-production  is  but  another  name  for  an  excess  of  capi- 
tal. The  times  are  ''hard"  or  "easy,"  and  prosperity  or 
adversity  depends  on  the  single  question  whether  construc- 
tive enterprise,  or  the  preparation  for  future  wants,  is  giving 
employment  to  the  excess  of  capital  and  to  one  million 
persons,  or  to  only  half  a  million;  half  a  million  consti- 
tute only  one  per  cent,  of  the  population  of  1880.  It  is  the 
Micawber  example  on  a  grand  scale — a  shilling  over  is 
wealth,  a  shilling  under  is  poverty.  One  per  cent,  of  the 
population  out  of  work  (500,000)  is  adversity  ;  one  per  cent, 
more  workmen  needed  but  not  readily  found  is  prosperity. 
Activity  in  the  circulation  of  capital  and  labor  rather  than 
mere  accumulation,  indicates  welfare ;  lack  of  confidence, 
slow  movement,  hard  times,  mean  want  because  a  fraction 
are  unemployed,  but  that  fraction  is  an  army  500,000  strong. 

I  have  already,  proved  that  there  were  about  300,000  less 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    279 

laborers  employed  in  the  construction  of  railroads  in  1875 
than  in  1 871,  and  that  there  are  probably  over  400,000  less 
in  that  work  in  1884  than  there  were  in  1882. 

In  a  previous  part  of  this  treatise  I  have  shown  the  small, 
er  relation  which  the  capital  in  all  manufactures  bore  to 
the  capital  in  all  railroads  in  1880.  We  may  assume  that 
the  cessation  of  constructive  enterprise  —  that  is,  in  the 
building  of  new  factories,  mills,  and  works  of  all  kinds — was 
checked  after  the  panic  of  1873,  and  we  know  that  it  is 
checked  now  in  1884,  but  perhaps  not  in  as  great  a  measure 
as  the  construction  of  railways  has  been  checkec,'  In  this 
cessation  of  factory  building  we  may  perhaps  account  for 
the  lack  of  employment  of  a  less  number  than  those  who 
have  been  discharged  from  railway  construction,  but  prob- 
ably enough  to  carry  that  number  which  I  computed  at 
400,000  up  to  560,000  in  all,  corresponding  substantially  to 
one  half  the  total  number  of  our  present  population  which 
I  have  assigned  to  constructive  work  under  normal  con- 
ditions. Upon  this  very  apparent  condition  of  adversity 
we  may  predicate  a  speedy  return  of  activity  and  prosperity. 
Where  can  one  find  560,000  men  and  ivomen  out  of  employ- 
ment at  the  present  moment  ?  They  are  not  to  be  found,  nor 
any  number  approaching  such  a  maximum.  Neither  could 
any  such  number  have  been  found  in  the  darkest  period  of 
depression  after  the  panic  of  1873.  The  thing  which  really 
happens  after  one  of  these  checks  to  the  construction  of  rail- 
ways, factories,  works,  or  furnaces,  is  that  those  who  are  dis- 
charged from  this  class  of  work  betake  themselves  to  new 
land,  open  new  farms,  build  up  new  towns  in  far-away  places, 
and  presently  add  to  the  demand  for  new  railways  and  be- 
come consumers  of  metals  and  fabrics  for  which,  again,  more 
new  works  and  new  mills  must  be  provided,  even  in  addition 
to  those  required  for  the  increase  of  population.  Witness 
Western  land  sales  in  hard  times. 


28o    THE  RAILWAY,  THE  FARMER,  AND   THE  PUBLIC, 

It  thus  happens  that  the  more  severe  the  shock  to  con- 
structive enterprise  and  the  greater  the  depression  at  one 
period,  the  greater  must  be  the  activity  and  progress  a  little 
later.  Thus  it  has  been  in  the  past,  thus  it  will  be  in  the 
immediate  future.  The  one  point  which  cannot  be  deter- 
mined is  the  exact  date  when  this  change  will  come.  This  is 
a  mental  and  not  a  material  question — a  question  of  confi- 
dence and  not  of  capital.  It  is  in  the  interval  of  adjustment 
to  changed  conditions  that  trade  is  dull  and  that  "times 
are  hard."  The  imagination  is  one  of  the  most  potent 
factors  in  rendering  adverse  conditions  more  intense,  and  in 
pushing  favorable  conditions  to  a  dangerous  extreme. 

I  have  endeavored  to  show  how  important  a  factor  the 
railroad  is  in  all  the  work  of  modern  life  in  this  land. 
There  is  one  more  comparison  yet  to  be  made.  The  figures 
in  the  admirable  census  volume  on  transportation  practi- 
cally concur  with  those  of  Poor's  Manual,  each  sustaining 
the  substantial  accuracy  of  the  other.  According  to  the 
census  the  number  of  miles  of  railroad  in  operation  June  30, 
1880,  was  87,801,  and  the  number  of  men  employed  in  their 
operation  and  maintenance  was  418,957,  a  fraction  less  than 
five  men  per  mile.  I  have  computed  the  number  engaged 
in  the  construction  of  railroads  in  1880  at  over  400,000  men, 
which  is  apparently  correct.  If  this  estimate  be  accepted, 
.more  than  800,000  men  were  engaged  in  the  railway  service  in 
the  census  year,  and  in  the  year  1882  the  number  must  have 
been  over  1,000,000.  The  total  number  of  males  engaged  in 
all  occupations  listed  in  the  census  was  14,744,942.  It  there- 
fore follows  that  one  man  out  of  every  i8|-  men  occupied  in 
any  kind  of  work  in  this  country,  cither  mental  or  manual, 
was  employed  in  1880  in  connection  with  railroads,  and 
since  then  the  proportion  has  been  greater.  Not  less  than 
600,000  are  now  employed   in  the  operation   of  railroads. 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    281 

For  many  years  more  than  one  man  in  every  ten  men  em- 
ployed in  any  kind  of  gainful  occupation,  aside  from  agri- 
culture, has  been  engaged  either  in  constructing  or  operating 
railways.  The  importance  of  this  fact  can  only  be  compre- 
hended by  comparing  this  great  peaceful  force,  which  is 
continually  engaged  in  making  the  struggle  for  life  easier, 
with  the  occupation  of  as  great  a  number  in  other  countries. 
Our  army  is  but  a  border  police  force,  opening  the  way 
for  yet  more  abundant  production.  As  the  railway  has  di- 
minished the  cost  of  moving  our  great  crops,  our  market 
has  extended ;  every  dollar  thus  added  in  money  or  in 
money's  worth  has  been  so  much  added  to  the  annual  pro- 
duct from  which  all  profits,  all  wages,  and  all  taxes  are  alike 
derived. 

On  the  other  hand,  with  every  year  the  nations  upon  the 
continent  of  Europe  have  been  more  and  more  oppressed 
by  increasing  armies,  heavier  taxes,  and  increasing  debts; 
each  short  interval  of  peace  barely  sufifices  to  enable  great 
armies  to  be  recruited,  but  neither  during  peace  nor  war  can 
debt  or  taxes  be  reduced. 

The  sum  of  our  taxes — national,  State  and  municipal — is 
eight  per  cent,  upon  the  largest  estimate  of  our  national 
product ;  but  from  the  worst  tax  of  all,  the  blood  tax  of  a 
standing  army,  wc  arc  saved.  We  spend  our  force  in  build- 
ing railroads  instead  of  wasting  it  in  passive  war.  In  the 
principal  states  on  the  continent  of  Europe  one  man  in 
every  twenty-two  is  a  soldier  in  active  service  in  a  standing 
army,  and  perhaps  one  more  in  every  twenty-two  is  en- 
gaged in  sustaining  that  soldier.  The  relative  burden  of  the 
standing  army  is  pictured  by  these  two  lines  : 


Europe,  1  in   22 


United  States,  i  in  400  ^-»       in  1880,  and  now  a  less  proportion. 

These  lines  may  well  be  pondered  by  those  who  treat  the 


282    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC 

rate  of  wages.  It  is  the  sum  of  wages  by  comparison  of 
which  the  cost  of  production  may  be  measured  in  money 
and  not  by  the  rate.  When  the  obstructions  of  time  and 
distance  are  removed,  as  they  are  almost  wholly  by  railroads, 
the  ra/e  of  wages  will  be  highest  in  money  where  the  cost  is 
lowest  in  labor;  because  at  that  place  the  greatest  skill,  the 
best  machinery,  and  the  most  productive  natural  conditions 
will  be  made  use  of,  whereby  the  largest  production  will  be 
assured  at  the  least  cost  of  human  labor ;  when  this  pro- 
duct comes  into  competition  with  other  products  of  like 
kind,  the  price  will  be  the  same  provided  the  quality  is 
equal,  or  higher  if  it  is  better.  Witness  the  competition  in 
London  of  the  wheat  of  Dakota  with  the  wheat  of  Russia 
and  India.  The  measure  of  the  cost  is  not  the  high  rate  of 
the  wages  of  the  few  skilful  men  who  work  the  machinery  of 
production  in  Dakota,  nor  is  it  the  low  rate  of  wages  of  the 
peasants  of  Russia  or  of  India.  Wages  are  but  the  labor- 
ers' share  of  the  value  of  the  joint  product  of  capital  and 
labor,  converted  into  terms  of  money  by  the  sale  of  such 
product ;  the  competition  of  capital  with  capital  tends  to  a 
constant  increase  of  product,  coupled  with  a  decrease  in  the 
rate  of  profit,  while  conversely  the  share  of  the  laborer  tends 
constantly  to  an  increase  both  absolutely  and  relatively. 
Hence  the  more  the  capitalist  applies  his  capital  and  in- 
creases his  wealth  the  more  the  laborers'  wages  rise  in  rate 
and  in  purchasing  power  alike.  The  measure  of  the  division 
of  the  laborers'  constantly  increasing  share  among  them- 
selves— the  personal  rate  of  each  man's  wages — rests  wholly 
on  the  individual  skill  and  industry  of  each  member  of  the 
great  industrial  army.  The  man  or  woman  who  applies  ma- 
chinery most  effectually,  and  who  compasses  the  largest 
product  with  the  least  expenditure  of  time  or  labor,  earns 
the  highest  wages, — in  other  words,  obtains  proportionately 


THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC.    283 

a  larger  share  of  the  proceeds  of  the  work  than  the  one  who 
is  incapable  or  who  is  subjected  to  more  adverse  conditions. 

Now  what  is  the  connection  of  these  lines  picturing  stand- 
ing armies  with  either  the  sum  or  the  rate  of  wages?  Each 
year's  product  is  exchanged  or  sold  and  thus  converted  into 
terms  of  money ;  a  small  portion  of  the  last  season's  crop, 
or  money,  Is  brought  over  to  set  this  year's  crop  in  motion, 
and  a  small  portion  of  this  year's  product  or  avails  in  money 
is  carried  forward  to  the  next ;  subject  to  these  conditions 
each  year's  work  must  meet  each  year's  wants,  and  the 
world  is  always  within  one  year  of  starvation,  the  most  pros- 
perous nation  within  two  years.  Each  year's  product  is 
converted  into  terms  of  money  by  sale  or  exchange,  and 
from  this  sum  must  be  derived  all  profits — all  wages  and 
all  taxes.  The  sum  of  the  product  will  depend  upon  the 
measure  of  labor  which  is  applied  to  natural  resources ;  if 
one  man  in  twenty  is  withdrawn  from  productive  work,  by 
so  much  is  the  product  decreased ;  if  one  other  man's 
product  is  needed  to  sustain  the  idle  soldier,  by  so  much 
are  the  taxes  increased.  Wages  are  cut  down  in  both  ways, 
by  reduction  of  the  product  and  by  the  waste  of  what  is 
produced  in  productive  taxation  or  preparation  for  war. 
When  the  writer  first  compiled  the  article  upon  the  Rail- 
road and  the  Farmer,  of  which  this  treatise  is<i  continuation, 
he  submitted  the  following  table. 

Since  that  date  (1881),  with  the  possible  exception  of 
Italy  and  Holland,  all  nations  upon  the  continent  of  Europe 
have  either  been  subjected  to  a  heavy  increase  of  taxation, 
or  else  to  an  annual  deficit  and  an  increase  of  debt.  It  ap- 
pears to  be  as  impossible  to  sustain  the  present  burdens  of 
passive  war  as  it  is  to  disband  the  armies  without  revolution ; 
yet  migration  is  obstructed  in  order  that  the  ranks  may  be 
kept  full 


2B4     THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

THE  BURDENS  UPON  EUROPE  AND  AMERICA  COMPARED    (OMITTING  RUSSIA,  TUR- 
KEY, AND  ALASKA.; 
Relative  Areas. 

Europe,   omitting  Russia 
and  Turkey,  1,546,802  sq. 

miles  ....  m^mmi^t^m^^^m^^m^m^m^m 

United    States,   omitting 
Alaska,  3,034,399     square 

mile  ...  mm^m^^^mamammmmmmmmmmm^^imm^a^mmmmi^mmmmmmmmmammmmm 


Relative  Population  to  One  Square  Mile. 

Europe,       145  per  sq.  mile.  aMBB^^^^^^B^^^^^MsaBMBM^ 
U.S.,  i6i         "  _. 

Relative  Burden  of  Debts  to  Each  Inhabitant. 

Since  1848  the  debt  of  Eu- 
rope has  nearly  trebled  and 
is  still  increasing.  In  1880 
it  was  §16.794.800000,  or  an 
average  to  each  inhabitant 
of  $74.64.  Since  1880  it  has 
increased,      ....  __^_^,^,^^^_^^^i^^^,^__^^^. 

In  1848  the  United  States 
owed  no  debt  of  any  mo- 
ment. On  the  1st  August, 
1866,  our  war  debt  was  at 
its  maximum,  and  was  es- 
timated (liquidated  and  un- 
liquidated) by  Secretary 
McCulloch  at  S2»997i386,203 
— an  avera;?e  to  each  in- 
habitant  at  that   date   of 


$8v35         .... 
March  i,  i88i,  the  debt  had 

been  more  than  one  third 

paid,  and  was  rcdTjced  to 

$1,879,956,412— an  average 

to  each  person  of  S36.85     . , 
At  this   date   the  debt   has 

been  reduced    to    $1,450,- 

000,000 — an  average  to  each 

person  of  $25 

What  do  these  Hnes  mean  to  him  who  can  read  what  is 
written  between  them?  Is  there  not,  on  the  one  side,  pas- 
sive war  alternating  with  active  war,  heavy  cost  of  produc- 
tion, high  taxes,  low  wages,  misery  and  wrong,  culminating 
in  socialism,  communism,  nihilism,  revolution,  and  repudia^ 


THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC.    2S5 

tion  ;  on  the  other,  peace,  order,  and  abundance,  low  cost 
of  production,  high  wages,  ample  profits,  stability,  and 
welfare?  But  this  is  on  one  condition — that  our  intelligence 
is  equal  to  our  opportunity,  and  that  the  demagogue  and  the 
ignorant  sentimentalist  do  not  combine  to  tamper  with  the 
standard  of  value  and  debase  our  coinage  ;  that  the  great 
forces  of  capital  and  labor  are  not  prevented  from  working 
in  harmony  by  meddlesome  statutes ;  and  that  all  taxes 
which  the  people  pay  are  received  by  the  Government  and 
are  honestly  expended  in  the  public  service,  by  officials 
chosen  and  maintained  in  office  on  the  condition  only  that 
their  ability  and  character  entitle  them  to  serve  in  public 
offices.  Let  us  now  return  to  our  main  subject,  the  influ- 
ence of  the  railroad. 

No  more  facts  or  figures  are  needed  to  prove  how  pro- 
foundly a"  moral  panic  "  in  railways  must  affect  all  interests 
in  this  country,  and  how  much  will  be  gained  in  human 
welfare  if  the  railway  service  is  now  brought  to  the  same 
standard  of  commercial  integrity  as  that  which  controls  all 
other  enterprises  in  this  and  other  civilized  countries. 

In  the  construction  and  operation  of  railroads  the  greatest 
ability,  industry  and,  integrity  have  been  and  will  be  exer- 
cised ;  but  it  has  been  truly  said,  "the  integrity  of  the 
many  makes  the  opportunity  for  the  fraud  of  the  few."  In 
railway  enterprises  the  opportunity  is  greater  in  proportion 
to  the  complexity  of  the  work  and  the  magnitude  of  the 
sums  employed,  therefore  have  the  villany,  the  fraud,  and  the 
breach  of  trust  been  almost  measureless.  Among  even 
those  who  are  now  engaged  in  this  work,  every  one  who  is 
in  any  way  conversant  with  affairs  can  designate  men  whose 
names  are  synonyms  for  all  that  is  able,  honorable,  and 
true.  But  alas  !  other  names  may  also  be  given  which  are 
synonyms  for  all  that  is  criminal,  base,  dishonorable,  and 


286    THE  RAILWAY,    THE  FARMER,  AND    THE  PUBLIC. 

fraudulent — names  of  men  with  whom  no  other  man  can 
serve  without  being  himself  defiled.  The  "  moral  panic  " 
will  end  only  when  such  men  are  not  only  dishonored  but 
discredited.  At  that  date  confidence  will  be  restored  and 
constructive  railroad  enterprise  will  once  more  begin. 

In  another  part  of  this  treatise  I  have  given  an  analysis 
of  a  loaf  of  bread,  and  also  some  facts  in  regard  to  the 
quantity  of  human  labor  represented  by  the  wheat  of 
which  the  flour  is  made.  I  proved  that  one  man's  work  for 
one  year,  on  a  great  Dakota  farm,  corresponded  to  the 
wheat  required  to  produce  i,ooo  barrels  of  flour,  and  to  de- 
liver it  at  the  railroad  with  an  ample  supply  retained  for 
seed.  Let  us  follow  this  matter  to  the  end  :  4,500  bushels 
of  wheat  hauled  from  far  Dakota  to  Minneapolis,  there  con- 
verted into  1,000  barrels  of  flour,  and  thence  hauled  to 
New  York,  is  equal  to  an  average  haul  of  120  tons  about 
r,700  miles.  Upon  the  New  York  Central  &  Hudson  River 
Railroad,  the  average  number  of  tons  hauled  per  year,  per 
man  employed  in  the  freight  service,  is  almost  exactly 
equivalent  to  the  work  of  one  man  for  one  year  in  hauling 
120  tons  1,700  miles.  I  have  not  the  exact  data  of  the 
labor,  in  days'  or  years'  work,  in  milling  and  preparing  barrels, 
but  as  nearly  as  I  can  compute  it  this  again  is  in  the  ratio 
of  one  year's  work  of  one  man  to  each  thousand  barrels. 
Add  to  the  work  of  these  three  all  the  labor  required  to 
keep  the  machinery  of  the  farm,  of  the  flour  mill,  and  of  the 
railroad  in  repair,  and  the  work  of  delivering  the  flour  to  the 
baker  in  New  York,  and  even  then  we  have  not  exceeded 
four  years'  work  of  four  men  to  each  thousand  barrels  of 
flour  ready  at  the  oven  for  conversion  into  bread.  I  have 
given  the  name  of  Samuel  Howe,  who  sells  good  bread  at  a 
fair  profit,  and  yet  at  a  price  of  three  cents  and  a  fraction 
per  pound,  and  from  him   I  learn  that  only  three  persons 


THE  RAILWAY,   THE  FARMER,  AND   THE  PUBLIC.    2^7 

are  needed  in  his  bakery  and  in  his  shops  to  convert  into 
bread  1,000  barrels  of  flour  and  sell  the  same. 

This,  then,  is  the  modern  miracle  :  that  by  means  of 
capital  in  farms,  flour  mills,  railways,  and  bakeries,  seven 
men,  earning  for  themselves  a  good  subsistence,  serve  one 
thousand  persons  with  all  the  bread  they  need  in  a  year, 
and,  in  the  whole  progress,  from  the  planting  of  the  seed 
until  the  bread  is  taken  from  the  oven  to  be  moved  to  the 
shop  for  sale,  not  one  human  hand  will  have  touched  the 
wheat,  either  in  the  grain  or  in  the  flour — only  the  bread 
itself  will  be  handled.  Yet  not  only  the  railway  corpora- 
tion, but  the  great  farmers  of  the  far  West  and  the  owners 
of  the  wheat  elevators  and  of  the  flour  mills,  and,  I  dare 
say,  the  great  baker  of  New  York,  have  been  the  special 
mark  for  the  obloquy,  abuse,  and  interference  of  the  dema- 
gogue, the  sentimentalist,  and  the  ignorant  and  meddle- 
some legislator;  while  capital  is  charged  with  oppressing 
labor  and  grinding  the  faces  of  the  poor.  It  was  said  of  old 
time  that  "the  fool  shall  be  brayed  in  a  mortar."  Perhaps 
the  true  punishment  of  those  who  excite  passion  and  preju- 
dice against  these  great  forces  of  capital,  by  which  bread 
has  been  made  abundant  and  cheap,  would  be  to  deprive 
them  of  their  benefit,  and  to  force  them  to  bray  their  own 
wheat  in  a  mortar  in  order  to  gain  their  bread. 

When  the  time  of  the  National  Legislature  is  taken  up 
by  the  discussion  of  yet  more  obnoxious  measures  of 
national  interference  and  futile  attempts  to  control  this 
great  work,  legislators  may  well  remember  that  by  means 
of  the  publicity  of  accounts  which  has  been  secured  by  the 
railroad  commissioners  of  several  States,  and  the  yet  greater 
national  publicity  of  accounts  secured  by  the  private  publi- 
cation of  Poor's  Railway  Manual,  the  service  of  the  railways 
has  been  analyzed  and  defended,  if  this  presentation  of  facts 


2S8  THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

constitutes  a  defence  and  a  justification  of  their  great  work. 
A  commission  which  may  bring  pubhc  opinion  to  bear  upon 
railway  corporations  may  well  be  established,  and  there  the 
work  of  the  legislator  may  well  cease. 

There  is  another  popular  prejudice  in  refutation  of  which 
a  few  words  may  be  said,  to  wit :  the  prejudice  against  the 
grants  of  great  areas  of  public  land  to  railway  corporations. 
That  this  system  has  been  abused  may  not  be  denied  ;  that 
it  has  led  to  many  premature  schemes  and  to  bad  methods 
of  construction  by  speculative  construction  companies  is 
admitted  ;  but  this  does  not  touch  the  merit  of  the  system 
itself.  That  merit  is  this :  by  granting  only  each  alternate 
section  of  640  acres  for  a  certain  distance  on  each  side  of 
the  line  of  construction,  the  subdivision  of  land  in  moderate 
parcels  has  been  assured,  and  a  monopoly  of  land  has  been 
prevented  in  a  more  effective  manner  than  could  have  been 
compassed  in  any  other  way.  It  may  be  that  some  land 
grants  ought  to  be  forfeited  for  cause,  and  it  may  be  that 
this  grand  ruling  idea  of  the  system  has  been  sometimes 
evaded.  Upon  these  mere  incidents  the  present  writer  has 
nothing  to  say.  He  would  only  call  attention  to  the  fact 
that  the  system  has  worked  well  in  causing  a  wide  distribu- 
tion of  our  population,  and  that  it  has  assured  a  homestead 
to  a  vast  number  of  persons  who  never  could  have  attained 
one  by  any  other  method  ;  because  without  the  railroad,  the 
construction  of  which  has  been  induced  by  the  land  grant, 
the  settlement  of  the  land  itself  could  not  have  been  made. 
On  the  other  hand  the  Government  itself  has  gained  the 
benefit  of  innumerable  sales  of  the  alternate  sections  at 
double  the  prices  of  its  other  unoccupied  territory.  It 
had  been  my  intention  to  append  a  table  to  this  treatise, 
giving  the  important  facts  in  respect  to  the  sales  of  railway 
and  Government  land  on  the  lines  of  Land  Grant  roads,  but 


THE  RAILWAY,   THE  FARMER,  AND  THE  PUBLIC,   289 

I  found  it  impossible  to  find  the  data  required.  The  sub- 
ject might  well  be  investigated  officially  by  the  Department 
of  the  Interior. 

I  have  ventured  in  this  treatise  to  give  the  reasons  why 
we  may  expect  a  speedy  return  of  constructive  enterprise, 
of  active  employment,  and  of  the  quick  circulation  and 
rapid  consumption  of  commodities,  in  which  prosperity  con- 
sists. It  is  doubtless  true  that  ''  there  is  a  tide  in  the  affairs 
of  men,  which,  taken  at  the  flood,  leads  on  to  fortune,"  but 
it  is  also  true  that  he  who  attempts  to  forecast  the  exact 
time  when  the  ebb  shall  cease  and  the  flood  shall  come,  and 
who  makes  an  error  even  of  a  single  month,  may  lead  to  the 
loss  of  the  fortune  already  gained,  because  no  man  can  tell 
when  a  "moral  panic"  will  end,  or  when  confidence  will  be 
restored  on  which  the  whole  depends. 


APPENDIX   I. 


In  this  connection  the  following  analyses  of  the  items  which  go 
to  make  up  the  price  of  bread  in  Boston  may  not  be  without  in- 
terest. It  will  be  observed  that  I  have  made  use  of  the  elements 
of  cost  in  a  small  bakery,  where  the  proportion  of  labor,  fuel,  etc., 
is  much  greater  than  in  a  large  and  thoroughly  equipped  establish- 
ment. I  have  also  given  the  prices  which  are  charged  for  a  poor 
quality  of  bread  in  small  shops  in  the  poorest  districts  of  the  city. 
The  destruction  of  the  very  poor  is  their  poverty  and  their  con- 
sequent inability  to  buy  their  food  and  fuel  on  good  terms.  What 
we  greatly  need  in  Boston  is  the  counterpart  of  the  "  Howe  Na- 
tional Bakery  "  of  New  York.  At  their  great  shops,  which  have 
been  placed  in  three  or  four  of  the  most  densely  populated  dis- 
tricts of  New  York,  a  loaf  of  the  best  quality  of  bread,  weighing 
two  pounds  before  it  is  baked,  and  about  if  pounds  afterward,  is 
sold  over  the  counter  for  cash  at  six  cents  per  loaf,  and  at  this 
price  the  owner  of  the  bakeries  is  satisfied  with  his  profit.  In  his 
works  the  cost  of  labor  and  fuel  is  less  than  half  the  sum  pictured 
in  the  diagram  which  gives  the  cost  of  bread  to  the  poor  of  Boston. 
Again,  in  this  we  find  an  example  of  adequate  capital — high  wages 
to  the  operative  in  the  bakery,  low  cost  of  production  of  baked 
bread,  and  cheap  food  to  the  poor  under  the  law  of  unrestricted 
competition,  and  under  the  rule  of  service  for  service,  by  means 
of  which  society  itself  exists,  and  under  which  labor  and  capital 
work  as  allies,  not  enemies. 

The  following  analysis  was  submitted  by  the  writer  to  the  Com- 
mittee on  Education  and  Labor  of  the  United  States  Senate  : 

Analysis  of  Cost  of  a  Loaf  of  Bread. — I  am  prepared  ta  ad- 
mit that  the  railway  has  been  a  most  important  factor  in  distribu- 


292    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC, 

ting  food  among  the  people  of  this  and  other  lands,  for  without  it 
thousands  might  starve,  but  I  shall  also  prove  to  you,  in  the 
analysis  of  the  loaf  of  bread,  that  it  has  become  relatively  the 
factor  of  least  importance,  at  its  present  cost,  of  all  the  items  which 
constitute  the  cost  of  bread  to  the  consumer  ;  therefore,  before 
you  undertake  to  regulate  the  railways  and  thereby  to  reduce  the 
price  of  bread,  meat,  and  fuel,  you  must  give  your  attention  to 
vastly  greater  elements  in  their  cost,  which  may  be  more  readily 
made  subject  of  statute  law  than  the  railway  service  can  be,  if 
either  kind  of  work  is  to  be  taken  in  charge  by  the  State. 

I  shall  take  as  my  unit  450  bushels  of  wheat  to  be  converted 
into  100  barrels  of  flour  and  then  into  bread,  and  I  shall  present  to 
you  all  the  elements  of  the  cost  of  this  bread,  both  in  figures  and 
by  graphical  illustration,  as  follows  : 

What  makes  the  price  of  bread  in  Boston  ?  Four  hundred  and 
fifty  bushels  of  wheat  are  required  to  make  100  barrels  of  flour.  In 
the  left-hand  column  it  is  assumed  that  this  wheat  has  been 
raised  near  Chariton,  Iowa,  and  milled  in  Chicago.  In  the  right- 
hand  column  it  is  assumed  that  the  wheat  has  been  raised  near 
Glyridon,  in  Dakota,  and  milled  in  Minneapolis. 

It  will  be  observed  that  if  the  railways  earn  as  profit  30  per  cent, 
of  their  charge,  their  profit  on  each  barrel  of  Iowa  flour  moved 
about  1,500  miles  is  only  35J  cents,  and  on  each  barrel  of  Dakota 
flour  moved  nearly  2,000  miles,  only  59;}-  cents.  In  point  of  fact 
the  actual  profit  on  grain  and  flour  carried  long  distances  is  much 
less  than  30  per  cent,  of  the  charge,  and  the  actual  profits  for  the 
above  distances  does  not  probably  exceed  25  cents  per  barrel  and 
50  cents  per  barrel,  respectively. 

The  railway  charges  are  now  so  small  that  it  does  not  leave  you 
much  of  a  margin  to  work  upon  and  to  save,  but  you  cannot  fail 
to  notice  that  the  charges  made  by  the  bakers  and  grocers  is  very 
large,  and  gives  you  an  ample  margin  for  legislative  action.  If 
you  reply  that  all  attempts  to  regulate  the  price  of  bread  have 
failed,  may  I  be  permitted  to  rejoin  that  all  attempts  to  regulate 
the  charge  of  the  railways  have  also  failed,  except,  perhaps,  in 


Chariton,  Iowa, 


No. 


S405  00 


No. 


$117  50 


No.  3.  $50  00 
No.  4.  $45  00 
No.  5.        $30  00 


No.  6.       $200  00 


No. 


No.  8.    $1,057  50 


$562  50 


No.  9.    $1,620  00 
$180  00 


.•x)  r  00  c« 


Nn.  xo.  8i.£oo  00 


October,  1883. 


No.  I,  S4051  is  the  price  which  the 
farmer  receives  in  Iowa,  at  90  cents 
per  bushel  ;  $360,  in  Dakota,  at  80  cents 
per  bushel. 


No.  2,  $117.50  is  the  charge  made 
by  tlie  railway  for  moving  450  bushels 
of  wheat  from  Chariton  to  Cliicago,  and 
100  barrels  of  Hour  thence  to  Boston, 
$19750;  Glyndon  to  Minneapolis  and 
thence  to  Boston,  $82.2,  ;  cost  of  rail- 
roaii  service  at  70  per  cent.,  8138.25  of 
the  total  charges. 

$35-25  profit,  at  30  per  cent.,  859,25- 

No.  3,  $50,  cost  of  milling. 

No.  4,  845,  cost  of  barrels. 

No.  5,  830,  merchant's  commissions 
and  cartage  in  Boston. 


No.  6,  $200,  cost  of  labor  in  making 
100  barrels  flour  into  bread  in  a  small 
bakery. 


No.  7,  $2to,  cost  of  fuel,  yeast,  salt, 
etc.,  used  in  converting  100  barrels  flour 
into  bread. 


No.  8,  final  cost  of  bread  ready  for 
distribution,  average  3*  cents  per 
pound  ;  varying  a  Hitle  •\\ith  tiie  quality 
of  the  flour  f-nd  tie  quality  of  oread. 
Iowa  flour  yields  270  and  2qo  pounds  per 
barrel ;  Dakota  flour  yields  280  and  300 
pounds  per  barrel. 


No.  9  the  price  which  the  poorer  peo- 
ple of  Boston  pay  for  poor  bread,  made 
from  a  uiedium  grade  known  as  "  baker's 
flour,"  averages  nut  less  than  6  cents 
per  pound,  which  makes  the  cost  of 
distnbuiing  100  barrels  of  Iowa  flour 
baked  into  bre'^d.  No.  g,  $562  50,  and 
100  barrels  Dakota  flour,  S5S7.50  at  the 
mininiuia  yield  of  270  and  280  poun  !s 
bread  to  the  barrel.  When  e'tber  kind 
of  flour  is  treated  so  as  to  yield  30 
pounds  bread  to  a  barrel  and  sold 
at  6  cents  per  j'ound,  $180,  or  $120,  is 
added,  and  the  final  cost  of  the  bread 
to  the  con««umer  is  at  the  rate  of  §18 
per  barrel  of  flour,  No.  10. 


Glyndon. 


lei 

m 


\      $360  00   No. 


'     $587  50 


294    THE  RAILWAY,   THE  FARMER,  AND    THE  PUBLIC. 

Belgium,  where  the  Government  has  once  at  least  been  obliged 
to  prohibit  the  private  corporations  which  own  a  part  of  the  rail- 
roads from  lowering  their  charges,  lest  the  Government  railroads 
should  be  unable  to  compete  with  them. 

Logical  Consequence  of  the  Demand  for  Governmental  Regulation 
of  Railroads. — Your  committee  has  been  asked,  by  what  are  known 
as  the  advocates  of  "  anti-monopoly,"  to  frame  and  present  to 
Congress  such  laws  as  will  forbid  capital  taking  the  advantage  of 
labor  by  means  of  excessive  charges  for  railway  service,  which 
charges  are  said  "  to  make  the  rich  richer  and  the  poor  poorer," 
and  "  to  make  bread  dear." 

The  distribution  of  bread  by  bakers'  wagons  and  through  gro- 
cers' shops  is,  as  I  have  said,  simple  but  costly  ;  the  distribution 
of  wheat  and  flour  by  railway  is  complex  and  difficult,  but  it  is 
now  done  at  so  little  cost  as  to  leave  little  margin  to  be  saved. 

If  your  committee  will  first  regulate  the  distribution  of  bread 
and  reduce  its  price  by  statute,  and,  second,  reduce  the  cost  of 
barrels  or  require  the  substitution  of  cheaper  sacks,  you  may  then 
be  fully  prepared  to  frame  suitable  statutes  for  the  regulation  of 
the  railway  service.  I  recall  this  subject  because  the  advantage 
of  this  method  is  that  you  can  begin  in  Washington,  and,  by  re- 
ducing the  cost  of  living  there,  you  can  make  the  salaries  of  Sena- 
tors and  Representatives  in  Congress  more  adequate.  When  you 
have  fixed  the  price  of  bread  by  legislation,  you  will,  of  course, 
take  up  meat,  timber,  and  fuel,  and  after  you  have  established  an 
economic  millennium  in  Washington,  the  several  States,  cities,  and 
towns  can  supplement  your  national  statutes  by  adequate  munici- 
pal ordinances,  in  order  to  complete  the  system. 

Effect  of  Railroad  Charges  on  Cost  of  Meat. — I  have  not  been 
able  to  make  a  complete  analysis  of  the  price  of  beef  in  Boston, 
but  this  much  can  be  submitted.  Texas  steers,  worth  4  cents  per 
pound  live  weight  at  Emporia,  Kans.,  can  be  and  are  brought  to 
Boston  at  a  charge  of  i  cent  per  pound.  What  it  costs  to  fatten 
and  kill  them  I  know  not,  but  this  I  do  know,  that  if  the  price  of 
my  sirloin  is  high  the  railway  charge  has  little  to  do  with  its  cost 


THE  RAILWAY,    THE  FARMER,  AND    THE  PUBLIC.   295 

to  me.  Salt  meat  is  brought  at  as  low  a  charge  as  grain — hence 
railway  charges  have  little  to  do  with  the  high  price  of  meat  in  the 
Eastern  States. 

It  therefore  follows  that  the  nxono'^oXx^X^^  if  any  such  there  are ^ 
who  are  grinding  the  faces  of  the  poor  and  rendering  bread  dear, 
are  not  the  Vanderbilts,  the  Tom  Scotts,  or  the  Garretts,  but  they 
are  the  nameless  bakers,  grocers,  and  others,  who  have  added  this 
enormous  charge  to  the  cost  of  bread  and  meat.  The  whole  rail- 
way service,  from  the  field  to  the  baker's  oven,  costs  but  half  a 
cent  per  pound,  but  the  service  of  the  baker,  and  the  grocer,  and 
the  shopman,  costs  2\  to  4  cents  per  pound  of  bread.  If  you 
will  analyze  your  pound  of  beefsteak,  or,  if  you  are  a  Yankee, 
analyze  the  salt  pork  with  which  your  beans  were  baked  for  your 
Sunday  breakfast,  I  think  you  will  find  the  greatest  monopolists, 
if  any  there  are,  are  running  the  butcher  wagons  and  the  provision 
shops  of  your  cities.  After  you  have  succeeded  in  abating  these 
enormous  charges  ;  after  you  have  regulated  the  simple  traffic  of 
the  baker,  the  grocer,  the  butcher,  and  the  provision  dealer ;  after 
you  have  prevented  them  from  "  grinding  the  faces  of  the  poor," 
then  take  up  the  railway  question,  if  you  please,  and  see  what  is 
left  for  you  to  do.  In  dealing  with  this  simple  matter  of  the 
shopman  and  of  the  service  of  distribution  by  cart  and  wagon, 
you  may  learn  how  to  regulate  by  statute  the  complex  operations 
of  the  great  railways  of  the  United  States,  which  have  taxed  the 
biggest  brains  and  the  ablest  men  of  the  land  these  twenty  year? 
or  more.  These  men  have  laid  the  foundation  upon  which  you 
can  work.  ^ 

I 


APPENDIX   II. 


Upon  one  of  the  great  farms  of  Dakota, 

I  man  in  i  day  plows       4  acres  at  20  bushels  per  acre    80  bushels. 
"  i«         seeds      15     "         "         "         '*      **     300       " 

<i  (<         harrows  15     "         "         "         "       "     300       " 

"  "         cuts        15     "         "         "         "       "     300       " 

<<  It         shocks    10     "         "         "         "       "     200       " 

"  "         thrashes  and  draws  to  elevator,  40       " 

300  bushels  at  the  railway  therefore  stands  for  the  work  of  3|-  men  plowing  i  day. 

"  "       I    man  seeding      " 

"  "       I      "     harr'w'g     " 

"  "       I      "     cutting       " 

"     '      "       i^  men  shocking    *' 
"  "      7i    "     thrashing    and 

drawing. 

(Say  16  men.)     15I  men  i  day,  300  bu. 

Or,  i8|-  bushels  per  man,  at  20  bushels  to  an  acre.  Multiply  by 
300  working  days  in  a  year,  and  the  equivalent  is  5,625  bushels 
for  one  year's  work  of  one  man.  Leave  1,125  bushels  for  seed 
and  home  consumption,  and  we  have  4,500  bushels,  from  which 
1,000  barrels  of  flour  will  be  made.  A  year's  annual  ration  of 
wheat  flour  to  each  person  is  one  barrel  a  year,  which  will  make 
275  pounds  of  baked  bread. 

Let  us  assume  70  cents  per  bushel  as  the  price  of  wheat  at  the 

railroad  in  Dakota,  and  produce  1,000  barrels  flour  into  bread  in 

New  York.     The  various  charges  are  as  follows  : 

4.500  bushels  wheat  at  70  cents $3ii50 

Movins^  to  Minneapolis  as  wheat,  and  from  there  to  New  York  as  flour, 

at  present  rales  (August,  18S4) If440 

Milling 500 

Barrels          ............  45O 

Conversion  into  bread — labor  and  material I,750 

Selling  the  bread  over  the  counter 500 


$7,790 


THE  RAILWAY    THE  FARMER,  AND    THE  PUBLIC.   297 

There  may  be  a  charge  for  a  merchant's  commission  and  for  cartage  if 
the  flour  is  not  bought  by  the  baker  from  the  miller,  or  is  not  deliv- 
ered from  the  cars  at  the  bakery    .         .         .         .         ,         .         .        $210 

275,000  pounds  of  bread,  2^^^  cents  per  pound $3, 000 

It  will  have  been  observed  that  the  raising  of  the  wheat  repre- 
sented the  labor  of  i  man  for  i  year.  The  moving  of  the  wheat 
and  flour  over  1,700  miles  represents  the  direct  labor  upon  the 
railway  of  i\  men  working  i  year.  The  direct  labor  in  milling 
and  in  making  barrels  from  the  log  represents  the  labor  of  i  man 
working  i  year.  Add  to  the  i\  thus  far  the  work  of  i  man  6 
months,  or  \  man  i  year,  engaged  in  the  repairs  of  machinery, 
and  1,000  barrels  of  flour  delivered  in  New  York  represent  only 
the  direct  labor  of  only  4  men  for  i  year. 

In  the  Howe  National  Bakery  of  New  York  labor  and  material 
are  economized  to  the  utmost,  and  the  bread  is  sold  over  the 
counter  with  the  least  waste  of  force.  The  conversion  of  1,000 
barrels  of  flour  into  bread  and  its  sale  represent  the  work  of  only 
3  persons  working  i  year.  The  modern  miracle  is  that  7  men  serve 
bread  to  1,000  persons,  and  in  so  doing  earn  high  wages  for  them- 
selves, while  the  owner  of  the  bakery  earns  his  private  fortune  in 
selling  good  bread  at  4  cents  a  pound  or  less.  His  six  cent  loaf 
which  is  upon  the  table  before  me  weighs  if-  pounds.  None  need 
ask  better  bread. 

The  entire  profit  of  the  railroads  for  moving  5,500  bushels  of 
wheat  200  to  300  miles,  and  1,000  barrels  of  flour  1,400  miles,  at  the 
present  rates,  has  been  computed  by  one  of  the  most  competent 
experts  at  $225 — being  15^  per  cent,  of  the  charge  of  $1,440. 
That  is  to  say,  the  profit  of  the  railway  for  bringing  1,000  barrels 
of  flour  1,627  miles  is  22\  cents  per  barrel — ^just  one  half  the  cost 
of  the  barrel  in  which  the  flour  is  packed,  or  a  trifle  more  than 
the  value  of  the  empty  barrel  in  New  York.  In  the  diagram 
which  I  submitted  to  the  Senate  Committee,  I  gave  the  price  of 
bread  in  the  small  shops  where  the  poor  deal  in  Boston — the  cost 
of  bread  in  a  small  bakery.  I  assigned  30  per  cent,  of  the  railroad 
charges  to  profits.     Now  I  have  exact  data  from  the  railroads,  and 


298    THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC, 

\  use  the  figures  of  a  baker  who  bakes  at  wholesale,  but  sells  bread 

at  the  least  charge.     These  figures  prove  that  the  poor  of  New 

York  are  served  with  better  bread  at  much  less  price  than  are  the 

poor  of  Boston. 

Wheat  assumed  to  be  raised  near  Glyndon  in  Dakota  :  5,625 

bushels  to  one  man's  work  ;  1,125  retained  for  seed  or  for  domestic 

consumption. 

$3,150   Price  of  4, 500  bushels  wheat  at  70c. ,  delivered  at  the  railroad. 
Total     (  1,215   Cost  of  railway  service  4,500  bushels  wheat  200  to  300  miles, 
charge    \  1,000  barrels  flour  1,400  miles. 

to  N.   Y.  \     225    Profit  on  the  railway  service. 
500    Milling  1,000  bushels  flour. 
450    Barrels  for  1,000  barrels  flour. 
1,750   Labor,  fuel,  yeast,  etc.,  used  in  making  275,000  pounds  of 
bread. 
500   Cost  of  selling  the  bread. 
210   Incidentals. 


$8,000  Cost  of  275,000  pounds  of  bread  in  New  York  ;    or,  7  men 
feed  1,000  for  i  year  with  bread. 

If  the  labor  of  those  who  provide  fuel  and  other  materials  for 
the  railway  and  for  the  baker  be  added,  the  number  might  be 
raised  to  10  men  to  1,000  barrels  of  flour  converted  into  bread. 

At  the  risk  of  repetition  let  me  again  give  other  examples  of  the 
saving  of  labor  which  has  resulted  from  the  application  of  ade- 
quate capital  and  skilled  labor.  The  year's  work  of  i  person  is  as 
follows  :  I  in  a  cotton  mill  spins  and  weaves  cotton  cloth  for  250 
persons  ;  i  in  a  woollen  mill,  woollen  cloth  for  300  persons  ;  i 
in  a  coal  mine,  iron  mine,  or  iron  furnace  serves  200  pounds  iron 
each  to  500  persons  ;  i  in  a  men's  boot  factory  makes  2  pairs  a 
year  of  boots  or  shoes  for  800  persons  ;  i  in  a  women's  boot  or 
shoe  factory  makes  3  pairs  a  year  for  1,000  persons  ;  i  in  a  shirt 
factory  sews  2,400  excellent  shirts,  or  more  of  lower  quality,  or  4 
a  year  for  600  to  800  persons. 

The  poor  sewing  women  are  only  those  who  sew  in  a  poor  way 
by  hand.  Skilful  sewers  in  the  shirt  factory  earn  more  than  $10 
per  week.  How  much  labor  the  materials  used  may  represent  is 
not  included  in  these  computations.  In  the  case  of  the  bread  the 
wheat  is  traced  from  the  beginning  to  the  end.  It  may  be  admitted 


THE  RAILWAY,  THE  FARMER,  AND   THE  PUBLIC.    299 

that  this  is  an  extreme  case,  and  that  the  average  production  of 
wheat,  except  on  these  great  bonanza  farms,  so-called,  represents 
a  much  greater  amount  of  labor.  I  have  only  presented  the  ex- 
treme of  the  present  because  it  may  become  only  the  average  of 
the  future,  but  that  part  of  the  cost  of  the  bread  which  constitutes 
the  railway  service  leaves  little  margin  to  be  gained  until  some 
new  invention  is  applied  by  which  the  cost  may  be  reduced.  The 
profit  of  the  railway  on  each  pound  of  bread  is  yi^  of  a  cent, 
it  will  puzzle  legislators  to  cheapen  this  service;  they  may  make 
it  more  costly. 

The  statement  that  the  wheat  from  which  1,000  barrels  of  flour 
may  be  made,  which  represents  the  yearly  ration  of  1,000  persons, 
can  be  raised  as  the  equivalent  of  one  man's  labor  for  one  year, 
may  be  questioned.  It  seemed  almost  incredible  to  the  writer 
until  he  had  proved  it  by  incontestible  evidence  of  many  com- 
petent witnesses.  A  fair  average  equivalent  for  one  day's  work 
of  one  man  on  a  Dakota  farm  is  12^^  bushels  of  wheat  in  an  ordi- 
nary season.  On  a  well  managed  and  thoroughly  equipped  farm 
in  a  season  in  which  the  crop  is  20  bushels  to  the  acre,  the 
average  for  one  day's  work  of  one  man  has  proved  to  be  i8j- 
bushels.  This  season,  when  the  crop  is  expected  to  be  25  bushels 
per  acre,  it  will  be  over  20  bushels  per  man  per  day.  That  is  to 
say,  the  average  per  man  per  day  is  very  nearly  the  product  of 
one  acre,  whatever  that  may  be  according  to  the  season.  If  we 
multiply  the  middle  statement  of  i8f  bushels  per  man  per  day  by 
300  working  days,  we  have  5,625  bushels  of  wheat  as  the  equiva- 
lent of  the  continuous  work  of  one  man  for  one  year  ;  but  of 
course  about  three  men  will  be  employed  for  only  part  of  a  year, 
or  during  the  wheat-growing  and  harvesting  season.  After  the 
wheat  farm  has  been  fully  equipped  with  adequate  machinery  and 
brought  into  good  condition,  the  crop  can  be  planted,  made  har- 
vested, and  moved  to  the  elevator  at  a  cost  ranging  from  $6.00  to 
$10.00  per  acre,  according  to  relative  conditions  ;  it  is  claimed 
that  on  the  best  fbrms  most  completely  equipped  the  whole  cost  can 
be  covered  at  $5.00  per  acre.     It  may  be  said  that  this  cannot 


300    THE  RAILWAY,  THE  FARMER,  AND    THE  PUBLIC. 

last,  but  such  a  hasty  conclusion  may  not  be  warranted.  There 
are  as  yet,  no  signs  of  exhaustion  ;  the  soil  of  this  section  appears 
to  be  of  a  peculiar  kind.  The  frost  strikes  deep  into  the  ground, 
and  long  before  it  is  out  below,  the  surface  is  dry,  warm,  and 
ready  for  the  seed  ;  after  that  the  moisture  from  the  melting  frost 
keeps  coming  up  laden  with  elements  of  fertility.  How  long  this 
will  continue  who  can  tell  ?  But  even  if  it  may  only  last  a  few 
years,  then  after  that  the  division  of  the  land  into  smaller  farms 
will  bring  in  fertilizers  and  other  methods  of  economic  cultivation. 
In  the  meantime  what  is  the  area  available  ?  The  area  of  Dakota 
only  is  150,000  square  miles,  of  which  but  a  mere  fraction  is  yet 
under  the  plow,  and  north  of  it  is  the  almost  unlimited  area  of 
wheat  land  in  Manitoba.  Is  it  not  apparent  that  wheat  may  go 
even  below  thirty-four  shillings  per  quarter  in  Mark  Lane  before 
the  supply  of  wheat  from  Dakota  would  cease  to  meet  the  demand, 
except  the  demand  of  our  own  country  should  stop  the  export 
tide  ?  With  our  present  railway  and  steamship  service,  even  at 
paying  or  profitable  rates  of  traffic,  our  farmers  can  unquestionably 
contest  the  markets  of  Europe  with  India  and  Russia,  down  to 
less  than  thirty-four  shillings  a  quarter  in  Mark  Lane,  if  they  can- 
not do  better  at  home.  The  English  quarter  of  wheat  by  which 
prices  are  quoted  is  480  pounds,  or  8  bushels  of  60  pounds  each 
— thirty-four  shillings  per  quarter  will  yield  a  little  over  one 
dollar  per  bushel  in  London,  at  which  we  can  readily  continue  the 
traffic,  but  of  course  at  a  greatly  reduced  profit  to  the  farmer.  The 
India  railways,  for  which  a  very  large  appropriation  is  about  to  be 
made,  will  doubtless  render  the  competition  in  India  a  little 
sharper,  but  it  will  be  observed  that  the  system  adopted  has  been 
planned  mainly  with  reference  to  the  distribution  of  food  in  India 
itself,  for  the  purpose  of  preventing  the  recurrence  of  famine.  It 
will  therefore  increase  the  consumption  of  food  in  India,  and  may 
diminish  the  export  of  grain  to  England  instead  of  increasing  it. 

July,  1884. 


OCCUPATIONS  CLASSIFIED.' 


There  can  be  no  better  way  of  presenting  the  immense  impor- 
tance of  this  problem  in  respect  to  the  distribution  and  use  of 
food,  ^^hile  incidentally  enforcing  the  need  of  manual  as  distin- 
guished from  purely  mental  instruction,  than  by  classifying  the 
whole  force  of  persons  who  were  engaged  in  gainful  occupations 
in  the  census  year  according  to  the  kind  of  work  done  by  each 
class. 

This  force  numbered  17,392,099,  or  a  fraction  less  than  one  in 
three  of  the  population.  The  list  of  their  occupations  is  as  ac- 
curate as  the  enumeration  of  the  population  itself,  because  it  was 
made  by  the  same  enumerators.  The  only  qualification  to  be 
made  is  that  many  laborers  are  listed  as  "  laborers  not  specified," 
who  may  have  been  on  farms  ;  and  doubtless  many  men  are  listed 
as  mechanics,  whose  work  was  done  in  connection  with  a  manu- 
facturing establishment.  In  consequence  of  the  latter  fact,  the 
separation  of  the  mechanics  or  artizans  whose  work  was  *'  indi- 
vidual" from  those  who  formed  a  part  of  a  **  collective  "  force 
employed  in  a  factory,  can  only  be  made  approximately. 

The  following  table  gives  a  very  close  approximation  to  the 
number  of  persons  in  each  one  thousand  who  were  occupied  in  any 
kind  of  gainful  occupation  in  the  census  year  : 

Class   I. — Purely  mental  and  individual  work  : 

Clergymen,  lawyers,  physicians,  surgeons,  chief  officers  of  banks,  tele- 
graph companies,  railroads,  insurance  companies,  and  other  occu- 

palions  of  like  kind .         .         .         40 

Class   II. — Distributive;  in  part  mental,  in  part  manual,  inf)art  col- 
lective, in  part  individual  : 
Merchants,    tradesmen,    clerks,  hotel-keepers,  commercial  travellers, 

salesmen,  and  saleswomen  ....,..,         60 

*  These  tables  belong  to  and  are  to  be  considered  in  connection  with  the 
matter  in  Appendix  VII.,  following  the  essay  on  wages.     See  p.  171. 


302 


OCCUPATIONS  CLASSIFIED. 


Class   III.— Manufacturing  or    mechanical  of  the    collective  order — 
that   is   to  say,  occupations  in  which  large  numbers  of  persons  are 
concentrated  in  factories : 
Textile  factories,  iron  and  steel  works,  machine  shops,  clothing,  hat, 

boot  and  shoe  factories,  or  other  analogous  works,  92  to  lOO,  say     .       lOO 
Class    IV. — Mechanical  pursuits,    mainly  individual    rather  than  col- 
lective : 
Carpenters,  blacksmiths,  masons,  wheelwrights,  painters,  etc.,  etc.,  107 

to  115,  say 107 

Class  V. — Personal  service  : 

Domestic  servants,  draymen,    employes  of   railroad,   telegraph,   tele- 
phone, and  express  companies,  steamboat  men,  sailors,  waiters, 

etc 131 

Class  VI. — Laborers  : 

Farm  laborers  (191),  laborers  not  specified  (107),  miners  (14)       .         ,       312 
Class  VII. — Agriculturists  : 

Farmers,  stock-raisers,  etc.  etc 250 


Total 


1,000 


It  may  be  held  that  the  food  of  the  members  of  Class  I.,  and 
the  servants  in  Class  V.,  will  be  intelligently  purchased  and  used, 
and  that  a  lessening  proportion  of  those  engaged  in  collective 
work,  Class  III.,  will  be  served  with  the  economy  of  the  collective 
or  boarding-house  system. 

On  the  whole,  it  may  be  held  that  900  out  of  each  1,000  will 
buy  and  use  food  according  to  the  measure  of  their  own  personal 
faculty  in  the  matter,  and  that  the  lower  the  grade  of  the  work- 
man, the  greater  the  want  of  economy  in  buying  and  the  greater 
the  waste  in  use. 


^  If  we  adopt  the  classification  of  the  census,  we  find  the  following  proportions 
in  each  1,000  of  the  people  who  are  occupied  in  gainful  occupations. 


•a 

a 

2 

B 

c3  . 

n 

•C.2 

§5 

1" 

II 

< 

0 

^2 

£ 

H 

646 

196 

63  1 

197 

293 

157 

442 

242 

107 

192 

223 

134 

441 

234 

104 

^:5 


Total. 


Southern  States,  inc.  Delaware  and  Mo.  . 
Middle  States,  inc.  N.  Y.,  N.  J..  Pa.  . 
Western  and  N.  Western  and  Territories 

New  England 

Whole  country 


95 

353 
209 

451 
221 


1,000 
1,000 
1,000 
1,000 
1. 000 


OCCUPATIONS  CLASSIFIED.  303 

The  absolute  necessity  for  manual  as  well  as  mental  instruction 
is  proved  in  the  most  conclusive  way  by  a  comparison  of  the  pro- 
portion which  the  work  which  is  individual  bears  to  the  work 
which  is  collective.  In  the  one  case  personal  faculty,  or  "  gumption,"^ 
is  the  quality  which  assures  success  ;  in  the  other,  long  practice' 
in  a  single  one  of  many  processes.  In  this  again  may  be  found 
the  proof  that  the  rate  of  wages  is  finally  determined  mainly  by 
personal  qualities,  and  rests  at  last  on  individual  character,  ca- 
pacity, and  moral  integrity. 

May  not  one  find  in  the  forces  developed  by  modern  science 
such  an  assurance  of  abundance  that  moderate  intelligence,  good 
health,  and  industry  will  certainly  secure  a  good  subsistence,  in 
which  case  it  may  not  pay  to  be  rich  ? 

The  two  conclusions  which  must  be  drawn  from  these  tables 
are  : 

ist.  .  The  relatively  small  proportion  of  all  persons  engaged  in 
productive  work  who  have  been  able  to  reach  a  plane  above  that 
of  the  laborer  or  domestic  servant,  or  of  the  small  farmer  who 
works  harder  for  a  meagre  subsistence*  than  any  of  his  hired 
men. 

2d.  The  small  relief  which  has  yet  been  given  by  the  adop- 
tion of  the  collective  factory  system, — by  the  use  of  automatic 
machinery  and  by  the  division  of  labor. 

In  this  country  at  least  this  relatively  low  plane  on  which  more 
than  one  half  the  working  people  are  still  to  be  found,  cannot  be 
attributed  to  any  lack  of  or  monoply  of  land.  There  is  far 
more  land  waiting  for  laborers  capable  of  gaining  their  subsist- 
ence from  it  than  has  yet  been  put  to  any  productive  use. 

In  fact,  both  land  and  capital  are  in  such  abundance  that  every 
person,  capable  either  of  using  the  land  or  of  applying  capital 
thereto,  is  being  sought  for  by  the  representatives  of  railways 
and  of  other  corporations. 

Under  such  conditions  can  there  be  any  thing  wanting  except 
those  personal  qualities  which  have  been  named  on  which  the 
rate  of  wages  finally  depends,  or  by  which  the  rate  of  wages  is 
finally  made, — character,  capacity,  and  industry  ? 


WHAT  MAKES  THE  RATE  OF  WAGES? 


(addenda  to  second  edition.) 

Since  the  completion  of  the  treatise  upon  "What  Makes  the 
Rate  of  Wages  ? "  the  attention  of  the  writer  has  been  called  to  the 
great  importance  of  a  correct  analysis  of  the  occupations  of  the 
people  of  this  country,  and  to  the  necessity  for  such  an  analysis 
before  any  scientific  treatment  of  the  three  great  issues  now 
before  the  public  can  become  even  possible. 

These  three  questions  are  : 

1.  The  Railway  Service,  and  the  proposed  regulation  thereof 
by  the  Government. 

2.  The  Silver  Coinage  and  the  Acts  of  Legal  Tender. 

3.  The  Collection  of  the  National  Revenue. 

All  of  these  questions  are  but  phases  of  the  major  issue  in 
respect  to  the  relations  of  labor  and  capital,  or  branches  of  the 
final  question — What  makes  the  rate  of  wages  ? 

We  may  first  consider  the  occupations  of  the  people  by  sections, 
in  their  effect  upon  the  traffic  of  railways,  and  for  this  purpose 
we  may  make  use  of  the  census  classification. 

The  table  of  the  occupations  of  all  who  were  engaged  in  gain- 
ful employments  may  be  accepted  as  one  of  the  most  accurate  in 
the  census  of  1880,  in  view  of  the  fact  that  the  same  enumerators 
who  counted  the  population  also  made  this  list,  and  each  person 
enumerated  gave  his  or  her  own  occupation. 

The  census  classification  is  into  four  groups,  viz.  : 

1.  Farmers  and  farm  laborers. 

2.  Professional  and  personal  service. 


306  THE  RATE  OF   WAGES, 

3.  Trade  and  transportation. 

4.  Manufactures,  mechanics,  and  mining. 

In  the  following  table  the  relative  proportions  engaged  in  each 
occupation  in  each  1,000  are  shown  as  to  the  whole  country,  and 
as  to  each  section  : 

Now,  if  we  consider  this  table  a  priori^  what  might  we  expect 
to  find  the  relative  railway  traffic  to  be  ? 

In  the  New  England  States,  where  the  manufacturing^  and  the 
mechanic  arts  give  employment  to  the  largest  number  of  persons, 
and  where  the  population  is  dense,  we  should  expect  to  find  the 
largest  number  of  passengers  to  each  mile  of  railroad.  In  the 
Southern  States,  where  population  is  widely  scattered  and  is 
chiefly  engaged  in  agriculture,  and  where  almost  all  the  crops  are 
light  in  weight,  we  should  expect  to  find  the  least  number  of 
passengers  and  tons  of  merchandise  per  mile. 

In  the  Middle  States,  which  are  both  manufacturing  and  com- 
mercial, and  through  which  the  heavy  Western  crops  are  moved, 
we  should  look  for  the  greatest  quantity  of  merchandise  per  mile, 
and  in  the  grain-growing  States  of  the  West  we  should  look  for 
heavy  traffic  in  merchandise  and  a  small  number  of  passengers 
per  mile. 

The  facts  fully  justify  the  theory,  and  although  the  two  fol- 
lowing tables  do  not  absolutely  follow  the  same  rule  of  sectional 
division,  yet  the  analogy  of  the  respective  laws  of  distribution  is 
very  plain. 

PROPORTIONAL  MOVEMENT  OF  PASSENGERS  AND  MERCHANDISE  SHOWN  BY  SEC- 
TIONS, THE  DIVISIONS  BEING  MADE  ACCORDING  TO  THE  NATURE  OF  THE 
TRAFFIC. 

Section  i. — New  England  States. — Food  and  Fuel,  moved  in  ;  Manufactures, 
moved  out  and  distributed. 

Section  2. — Middle  States  (New  York,  New  Jersey,  Pennsylvania,  Delaware, 
and  Maryland). — Food,  moved  in  and  through  ;  Fuel  and  Metal, 
moved  out ;  Manufactured  Goods,  moved  out  and  distributed. 

Section  3. — Western  States  (Ohio,  Michigan,  Indiana.  Illinois,  Wisconsin,  Min- 
nesota,  Iowa,    Kansas,    Missouri,    and   Nebraska). — Food   and 


is 


I        i 


b 

•-] 

b 

55 

O 

O 

Q 

tn 

g 

td 

S 

O 

g 

>< 

^ 

g 

•"I 

i 

S' 
u 

p^ 

Pi 

3 

D 

g 

s 

O 

u 

o 

3 

Q 

< 

^ 

H 

S 

^ 

g 
^ 

Pi 
< 

hi 

b 

u 

c 

Q 

^ 

2; 

< 

i 

« 

< 

ei 
W 
S 
Pi 

< 

1 

o 

b 

2 
12 

§ 

'-' 

^ 

o 

^ 

< 

M 

Q\ 

b 

O^ 

D 

K 

o 

Z 

u 

M 

< 

<: 

o 

s 

K 

tn 

2 

> 

o 

W 
2 

o 

H 

►J 

^ 

g 

g 
en 

<: 
Pi 

?: 

p< 

H 

o 

< 

Q 

£ 

w 

Z 

r- 

"< 

S" 

"~"~" 

da 

ss 

s 

1 
> 

^ 

f 

B^ 

s' 

1^ 

> 

> 

1 

> 

a-' 

S  :? 

H 

H 

'C 

'^^ 

1 

=y 

•*^    . 

3 
o 

cCl^ 

> 

hB- 

en 

1 

1  "^ 

^  £ 

.2 

1. 

1^ 

S 

1 

^* 

ta 

s 

i-i 

1 

£ 

o 

e4 

H 

rt 

"O 

1 

Q 

i 

i 

Oh' 

55 

o 

4) 

H  in 

i 

«a^ 

.  4 

^ 

•a 

.fe 

I  '' 

w 

Ou"  'S' 

•y.  f^. 

"o 

c 

55 

a 

1   *• 

p    N 

B 

c4 

3 

c 

1 

" 

a^ 

'bb 

"3 

1 

CO 

1. 

1 



S 
^ 

1 

w 

CO 



>, 

•a 

d 

5 

i 

c 

^ 

u 

3 

■4 

to 

al 

^ 

3 

Ok 

«o 

O 

.    fO 

1 

C/3 

fc« 

|_4 

1. 

a<S 

'"' 

« 

'~' 

, 

1. 

hJ 

fa 

fe 

c^     . 

M 

1 

— 

1. 

Si 

1 

Si 

1 

3o8 


WHA  T  MAKES 


Timber,  moved  out ;  Manufactures,  moved  in  ;  Fuel,  etc. ,  dis- 
tributed. 
Section  4. — Southern  States — Cotton,  Wool,  Hemp,  Tobacco,  and  some  Metal, 
moved  out ;  Food  and  Manufactures,  moved  in  ;  local  distribu- 
tion. 


TABLE    I. 


Passen-    Passen- 
Miles  gers      gers  per 

R.  R.       Carried.      Mile. 


Proportion  per  Mile. 


Section  1.— N.  E.  6,323  72,377,556  11,446 

Section  2. — Mid.  17,131  126,354,067  7,376 

Section  3,— West  60,525  83,823,759  1,385    t 

Section  4.— South  26,135  »7i453i579         668         1 


Miles        Tons      Tons  per 
R.  R.      Carried.       Mile. 
Section  i.— N.  E.      6,323     30,670,213     4,850 

Section  2. — Mid.      17,131  186,736,924    10,900 

Section  3.— West     60,525  144,853,216      2,393 
Section  4.— South    26,135     31,014,619     1,187 


FREIGHT  MOVEMENT. 
TABLE    n. 

Proportion  per  Mile. 


Tons  Carried 
One  Mile. 
Section  1.— N.  E.    285,797 


TABLE    III. 

Proportion  to  Each  Mile. 


Section  a. — Mid.  936,890 
Section  3.— West  356,585^ 
Section  4.— South     116,29a 


The  importance  of  this  classification  will  be  very  apparent  when 
we  consider  the  relation  which  volume  of  traffic  bears  to  rates  of 
charge  for  such  service. 

While  it  does  not  follow  absolutely  that  the  more  freight  and 


THE  RATE  OF  WAGES?  309 

passengers  a  railway  system  is  called  upon  to  move  the  lower  may 
be  its  rates,  yet  it  is  a  law  that  unless  a  railway  system  is  worked 
up  to  the  capacity  of  such  equipment  as  it  must  have  in  order  to 
work  at  all,  its  rates  of  charge  must  be  higher  in  inverse  propor- 
tion to  the  amount  of  its  traffic.  Hence  it  follows  that  after  all 
due  consideration  has  been  given  to  grades,  length  of  haul,  ter- 
minals, fuel,  and  to  the  quality  of  the  traffic  ;  -and  after  the  rates 
have  become  adjusted  so  as  to  meet  all  these  complex  and  con- 
fusing elements  of  the  problem,  the  number  of  tons  and  of  pas- 
sengers will  then  constitute  a  finally  controlling  element.  Those 
railways  which  are  in  the  great  lines  of  movement  of  grain  (now 
about  100,000,000  tons  per  year),  fuel  (now  about  90,000,000 
tons),  timber,  and  pther  heavy  substances,  must  and  will  be  worked 
at  a  much  less  cost  and  at  a  much  lower  charge  per  ton  than 
those  railways  whose  traffic  consists  almost  wholly  of  fibres 
(2,000,000  tons),  metals  (6,000,000  tons),  and  general  merchan- 
dise or  food  for  local  distribution. 

Under  these  conditions,  the  more  the  attempt  is  made  to  control 
the  rates  of  traffic  by  statute,  the  higher  the  rates  charged  must 
be,  because  it  is  very  plain  that  the  rates  on  railways  which  have 
a  small  traffic  cannot  be  reduced  by  statute  to  the  level  of  those 
which  have  a  heavy  traffic  unless  the  State  takes  them  and 
operates  them  at  a  loss  ;  and  therefore  it  follows  of  necessity 
that  statute  interference  can  only  end  in  an  advance  of  the  low 
rates  now  charged  on  the  lines  having  a  heavy  traffic  to  the  higher 
rates  of  the  lines  having  a  small  traffic,  if  the  statutes  do  not  prove 
to  be  inoperative.  Such  statutes  have  up  to  this  time  utterly 
failed,  after  a  period  of  ineffectual  disturbance  to  the  whole  traffic 
of  the  country. 

The  main  interest,  however,  in  the  classification  of  occupations 
is  the  clue  which  it  gives  to  the  small  compensation  or  rate  of 
wages  for  which  it  appears  that  a  very  large  portion  of  the  people 
must  work,  because  there  is  no  more  to  be  divided  among  them. 

The  classification  of  the  census  under  four  heads  is  of  no  value 
for  this  purpose,  because  it  places  domestic  servants  and  common 


310  THE  RATE   OF  WAGES. 

laborers  in  the  same  category  with  professional  persons.  We 
may,  therefore,  sort  all  persons  occupied  into  seven  groups  : 

For  this  classification  into  seven  groups  only  approximate  accu- 
racy can  be  claimed,  for  reasons  which  are  given  hereafter  ;  but 
the  main  feature,  to  wit,  the  relatively  low  grade  of  the  work,  and 
therefore  low  wages  of  a  very  large  portion  of  the  people,  is  un- 
pleasantly conspicuous.  A  little  less  than  one  in  three  of  the 
whole  population  is  engaged  in  gainful  work,  and  if  my  computa- 
tions are  approximately  correct  the  share  which  each  person  of 
each  group  of  three  of  the  so-called  "  working  classes  "  can  have  is 
only  what  forty  to  forty-five  cents  a  day  will  buy.  When  depres- 
sion reduces  even  this  low  measure,  what  wonder  that  trouble 
ensues  if  injustice  is  even  suspected  in  the  social  order  by  the 
uninformed  or  ignorant  ? 

In  the  following  table  the  specific  numbers  in  each  separate 
occupation  are  sometimes  given  from  the  census  data  exactly,  and 
sometimes  by  computing  together  in  round  approximate  figures 
those  whose  occupations  are  analogous.  The  shading  in  the 
graphical  lines  is  intended  to  show  approximately  the  proportion 
of  each  class  whose  earnings  may  be  above  the  average  of  annual 
income,  as  compared  with  those  whose  earnings  are  at  that  rate  or 
below  it.  No  absolute  data  exist  for  making  this  last  separation, 
' — it  is  by  estimate  only. 

We  may  consider  this  table,  not  only  because  of  the  picture 
which  it  gives  us  of  the  planes  into  which  society  is  now  stratified, 
if  such  an  expression  may  be  used,  but  also  in  the  relation  of  each 
class  to  the  other  in  its  purchasing  or  exchanging  power  ;  and, 
finally,  in  the  effect  which  a  lack  of  occupation  on  the  part  of  any 
large  number  in  the  lower  planes  must  have  upon  the  demand  for 
the  products  of  capital  or  upon  the  prosperity  of  those  in  the 
higher  planes. 

In  Class  I,  consisting  of  persons  whose  work  is  purely  mental, 
are  to  be  found  all  teachers,  country  clergymen,  literary  persons, 
journalists  and  the  like,  comprising  more  than  one  half  of  the 
whole  number  ;  and  in  this  category  will  be  found  a  very  large 


O  et 


II 

o  -yr 

wo 

,o 
c  o 
V  bo 
6^ 
go 

BTTa 

he* 


•0-3 

beet 
C 


•»  I    I 

foa  J- 
''*0  cfl'    • 

'III 

^  <«  o    - 

OC  d  « 

ills 


4>T3 
■^  bD 

"u  to 


xnti 

to 


•a  p 


^-3 

fed 


l! 


2  bfl 
H.S 

•£" 

U    U    C4 

o  S  o 
O 


c  2  2 


!«« 


ill 


u  o 
62 


<s^ 


312  WHAT  MAKES 

proportion  whose  purchasing  power  is  not  on  the  average  above 
that  of  a  first-class  mechanic.  In  Class  II  one  half  of  the  num- 
ber consists  of  clerks,  salesmen,  saleswomen,  and  other  minor  em- 
ployes, whose  purchasing  power  would  stand  between  that  of  a 
factory  operative  and  a  good  mechanic. 

Subdividing  these  two  classes,  we  then  have  among  every  i,coo 
in  purchasing  power — 

GRADE  X. 

Persons  of  high  purchasing  power — 

Class     I,  one  half          ...,.,,,  2o 

Class  IT,  one  half 30 

To  these  may  be  added  perhaps  one  fifth  of  Class  VI,  pros- 
perous farmers  .........  50 —       100 

GRADE  II. 

Medium  purchasing  power — 

Class       I,  teachers,  etc.,  one  half 20 

Class     II,  clerks,  etc.,  one  half     ......         30 

Class  III,  factory  and  machine-shop  operatives,  all       .         .  lOO 

Class   IV,  mechanics,  all 107 

Class   VI,  two  fifths  of  the  farmers 100—      357 

GRADE  III. 

Lowest  purchasing  power — 

Class      V,  servants,  etc 131 

Class    VI,  two  fifths  of  the  fanners 100 

Class  VII,  laborers 312 —      543 

Total ,  1,000 

Factory  operatives  are  classed  in  Grade  II,  because  their  food 
is  usually  purchased  with  intelligence  at  low  prices. 

From  this  analysis  it  will  appear  how  much  the  activity  of  trade 
may  depend  upon  the  purchasing  and  consuming  power  of  Grade 
III,  numbering  more  than  one  half  of  the  whole  working  force. 

The  greater  part  of  what  is  called  "the  business  of  the  coun- 
try" consists  in  the  exchange  of  the  necessities  of  life.  The 
difference  in  the  actual  consumption  of  food,  fuel,  and  clothing 


THE  RATE  OF  WAGES?  %\% 

between  the  rich,  the  well-to-do,  the  mechanic,  the  operative,  and 
the  laborer,  consists  more  in  quality  and  method  of  service  than 
in  quantity,  and  therefore  any  lack  of  occupation  which  deprives 
a  large  number  even  of  common  laborers  of  their  customary 
supply  of  such  articles  will  affect  the  trade  of  the  merchant,  the 
traffic  of  the  railway,  and  the  sale  of  the  products  of  the  manu- 
facturer in  vastly  greater  measure  than  a  temporary  commercial 
crisis  which  only  changes  the  ownership  of  realized  wealth.  The 
present  period  of  depression  must  be  considered  in  this  light  ;  it 
is  very  different  from  the  ordinary  commercial  crises  such  as  those 
of  1836  and  1857. 

Let  it  be  remembered  that  in  1882  about  650,000  men, 
mostly  laborers,  were  employed  in  the  mere  construction  of  rail- 
roads, and  that  in  1884  not  exceeding  220,000  were  occupied  in 
this  work.  Let  it  next  be  remembered  that  in  1880,  1881,  and 
1882  there  was  a  rapid  and  progressive  increase  in  the  number  of 
factories  and  works  of  all  kinds,  which  had  almost  wholly  ceased 
in  1884,  from  which  cessation  perhaps  not  less  than  250,000  men 
must  have  been  thrown  out  of  employment.  In  these  two  facts 
we  have  evidence  of  lack  of  customary  employment  for  about 
680,000  men,  or  nearly  8  per  cent,  of  the  whole  consuming  force 
in  Grades  II  and  III. 

Whenever  this  partly  idle  force  shall  have  been  placed  on  new 
land  or  found  new  work,  or  whenever  confidence  and  capital  be- 
gin to  work  together  on  the  old  lines,  the  present  depression  may 
end  and  prosperity  may  be  renewed. 

It  is  the  common  laborer  who  suffers  most  in  a  period  of  depres- 
sion, and  if  I  am  even  approximately  correct  in  my  estimate  of  the 
number  of  laborers  discharged  by  the  cessation  in  the  construc- 
tion of  railways,  mills,  and  works,  not  less  than  one  quarter  of  all 
the  laborers  not  listed  as  on  farms  have  thus  suffered.  In  a  true 
diagnosis  we  must  find  the  seat  of  the  disease  before  we  can 
apply  the  remedy. 

Only  approximate  accuracy  can  be  claimed  for  the  analysis  con- 
tained in  the  foregoing  table,  because  the  groups  are  not  capable 

OP   TH15         -^ 


|UNI7EESIT7 


314  WHAT  MAKES 

of  absolute  definition.  It  is  suggestive  ratlier  than  conclusive. 
For  instance,  all  that  were  occupied  as  machinists,  on  clothing, 
boots  or  shoes,  milliners  and  the  like,  have  been  placed  in  the 
collective  factory  work,  because  such  is  the  tendency  of  these 
arts  ;  but  many  such  persons  belong  in  the  mechanical  group,  not 
collective  but  individual. 

On  the  other  hand,  many  of  those  placed  in  the  latter  class  are 
doubtless  connected  with  large  factories.  The  doubt  having  been 
given  to  the  collective  factory  group,  which  actually  counts  only 
92  to  93  instead  of  100.  This  classification  may  be  accepted  as 
fairly  accurate,  and  it  shows  a  somewhat  surprising  result.  It 
proves  how  little  we  have  yet  displaced  handwork  and  individual 
faculty  or  gwnption  by  the  substitution  of  automatic  machinery. 
The  improvement  in  the  tools  which  are  guided  and  directed  by 
hand  and  brain  has  perhaps  been  much  greater  than  the  substitu- 
tion of  automatic  machinery. 

There  is  less  uncertainty  in  regard  to  the  other  groups.  One 
thing  is  very  certain,  and  that  is  by  far  the  greater  porticn  of  all 
who  are  occupied  in  any  gainful  work  are  in  the  position  of  wage- 
laborers  or  small  farmers,  and  therefore  any  cause  of  depression 
which  impairs  their  purchasing  power  by  lack  of  employment,  or 
by  reducing  their  wages  or  earnings,  must  react  with  very  great 
severity  upon  the  profits  of  manufacturers  and  merchants.  So 
far  from  the  interests  of  the  several  classes  being  antagonistic, 
they  are  interdependent,  and  there  is  nothing  so  adverse  to  high 
profits  of  capital  as  low  wages  for  labor.     Where  is  the  remedy  ? 

The  period  of  depression  through  which  we  are  passing  is  very 
similar  to  that  which  ensued  after  the  so-called  panic  of  1873,  and 
may  find  the  same  remedy,  unless  the  world  is  really  overstocked 
with  the  products  of  agriculture  ;  a  condition  which  at  any  rate 
cannot  last  long.  Given  a  demand  for  grain,  meat,  and  dairy  pro- 
ducts, the  land  still  offers  relief,  and  it  is  in  a  redistribution  of 
laborers  upon  new  land  that  relief  must  soon  come. 

It  will  be  observed  that  in  this,  as  in  other  periods  of  depres- 
sion, the  sales  of  government  and  of  railroad  lands  have  been  very 


THE  RATE   OF  WAGES f  315 

large,  but  the  change  in  the  distribution  of  labor  by  a  transfer  to 
new  land  is  very  slow,  and  a  long  time  elapses  before  new  settlers 
become  large  consumers  of  manufactured  goods.  People  continue 
to  wear  old  clothes  when  out  of  work  or  when  changing  their 
mode  of  life 

The  cessation  of  constructive  enterprise  in  1872-73  was  very 
sudden,  the  redistribution  of  laborers  afterward  was  very  slow,  but 
by  January  i,  1879,  when  the  specie  standard  was  restored  and 
all  doubt  ceased  for  a  time  as  to  the  stability  of  the  currency, 
every  condition  was  ripe  for  the  activity  and  prosperity  which 
ensued. 

In  the  same  way,  and  in  even  greater  measure,  after  the  exces- 
sive railway  construction  of  this  decade  culminated  in  1882,  the 
cessation  of  constructive  activity  in  all  directions  was  sharp  and 
severe,  but  since  then  the  redistribution  of  labor  has  been  steadily 
progressing,  and  if  all  doubt  as  to  the  stability  of  the  currency 
could  be  again  removed  by  the  cessation  of  the  coinage  of  silver, 
a  period  of  activity  and  prosperity  might  quickly  come. 

Our  population  is  now  gaining  with  great  rapidity,  and  the  ab- 
solute demand  for  shelter,  clothing,  subsistence,  and  additional 
means  of  communication  for  this  increase  cannot  be  long  held  in 
abeyance.  The  country  is  full  of  all  the  elements  of  wealth,  and 
just  as  the  restoration  of  the  specie  standard  in  1879  gave  the 
necessary  confidence  then,  so  might  the  cessation  of  the  coinage 
of  silver  dollars  give  confidence  in  the  stability  of  the  standard  of 
value  now,  so  that  the  activity  and  prosperity  of  1880  might  recur 
in  1885  if  Congress  would  act  at  once. 

The  number  of  persons  out  of  work  at  any  given  time  is  always 
exaggerated,  because  common  laborers,  when  out  of  work,  always 
flock  to  the  city  in  search  of  employment,  and,  being  thus  concen- 
trated, appear  to  be  in  greater  force  than  they  really  are  ;  yet, 
when  even  a  small  percentage  of  labor  is  idle,  it  has  the  same  effect 
on  the  general  market  for  labor  that  a  small  excess  of  goods  has  on 
the  market  for  goods.  One  adverse  condition  reacts  upon  the 
other  rendering  both  more  intense  until  the  time  arrives  when  con- 


Sl6  WHAT  MAKES 

stnictive  enterprise  can  no  longer  be  deferred,  then  consumption 
is  renewed  at  its  normal  rate. 

The  only  question  now  is:  Has  the  time  arrived  in  1885  for 
preparation  to  be  made  for  the  increase  of  population  of  about 
2,000,000  in  1886  ? 

Even  in  1884  we  have  found  it  necessary  to  add  4,000  miles  of 
railway.  Shall  we  need  6,000  presently  in  one  year  ?  If  so,  over 
100,000  idle  men  will  be  set  to  work  on  2,000  miles  of  additional 
track. 

Will  each  family  of  five  in  the  increase  of  2,000,000  require 
a  house,  or  part  of  a  house,  and  furniture  at  an  average  cost  of 
$500  per  family  ?  If  so,  the  work  of  500,000  mechanics  and 
laborers  will  be  needed  at  $400  each  per  year  to  supply  them. 

What  other  provision  must  be  made  ?  Each  one  can  reply  ac- 
cording to  his  judgment.  Suffice  it  that  at  a  certain  date,  sooner 
or  later,  constructive  enterprise  must  begin,  and  when  it  does  every 
man  now  idle  will  be  set  to  work  and  many  more  will  be  needed. 
With  an  excess  of  capital  waiting  to  be  invested  and  an  excess  of 
labor  waiting  to  be  used,  and  with  a  peremptory  necessity  for  con- 
structive work  near  at  hand,  what  other  cause  can  be  assigned  for 
continued  commercial  depression,  except  the  uncertainty  as  to  the 
standard  of  value  which  is  caused  by  the  coinage  of  low-priced  silver 
dollars  ? 

The  utter  insignificance  of  the  silver  product  as  compared  to 
others  is  shown  by  the  accompanying  table.  I  have  called  the 
silver  interest  a  "fly-speck."  Are  the  conditions  now  ripe  for 
prosperity  to  be  retarded  in  their  beneficent  action  in  deference 
to  a  political  and  economical  "  fly-speck  "  ? 

It  is  possible,  by  a  graphic  comparison  of  the  annual  value  of 
our  product  of  silver  with  those  of  food,  clothing,  and  other 
staples — at  present  reckoned  on  the  gold  basis  of  100  cents  to  the 
dollar, — to  give  a  clearer  notion  of  the  confusion  into  which  the 
business  of  the  country  is  sure  to  be  thrown  if  the  act  for  the 
enforced  coinage  of  silver  is  not  soon  repealed. 

The  following  table  gives  the  relative  value  of  the  silver  product 


THE  RATE  OP  WAGES? 


317 


of  the  United  States,  shown  by  a  comparison  with  some  other 
important  articles  of  consumption.  The  value  of  the  articles  of 
food  given  is  on  the  basis  of  the  average  consumption  of  each 
person  in  the  United  States  (counting  two  children  under  ten  as 
one  person)  being  assumed  to  be  equal  to  the  ascertained  con- 
sumption of  cotton-factory  operatives  in  New  England  and  in  the 
Middle  States.  The  estimates  of  the  value  of  clothing  and  other 
articles  made  from  fibres,  and  of  cotton,  wool,  and  iron,  are  approx- 
imate, but  sufficiently  accurate  for  purposes  of  comparison.  Popu- 
lation reckoned  at  the  consuming  power  of  50,000,000  on  a  probable 
total  population  of  57,000,000,  counting  two  children  under  ten  as 
one  adult. 


Meat,  poultry,  and  fish,  9 

7-10C.  worth  per  day    .  $i 
Clothing,  carpets,  etc.,  $30 

per  year  each  .        .        .1 
Dairy— i  pint  milk,  \\  oz. 

butter,  scrap  cheese,  all 

5c.  per.  day      .        .        .     912,500,000 
Bread— ibbl. flour  per  year, 

bread  at  2jc.  per  day      .     456,000,000 
Vegetables  at  a  cost  of  i 

98-iooc.  per  day       .        .      360,500,000 
Sugar  and  syrup,  i  94-iooc. 

per  day     ....     353,000,000 
Tea  and  coffee,  i  2-iooc.  per 

day 185,000,000 

Fruit,     green     and     dry, 

62-iooc.  per  day      .        .      113,000,000 
Domestic    eggs,    i    every 

other  day,  12c.  per  dozen       91,250,000 
Salt,     spices,      ice,     etc., 

49-iooc.  per  day      .        .       89,000,000 


$5,825,250,000  Food  and  Clothing. 


11.  The  cotton  crop,  6,000,000 

bales,  at  $50     .       .       .     300,000,000  ^ 

12.  The     pig-iron     product, 

4,250,000  tons,  at  $20      .       85,000,000  g 

13.  The  wool  clip,  320,000,000 

lbs.,  at  20c.        .        .       .       64,000,0003 
Silver  product,  at  gold  value, 

only^ 40,000,000  i 


3l8  WHAT  MAKES 

The  above  ration  of  sugar,  tea,  and  coffee  of  the  factory  opera- 
tives is,  doubtless,  considerably  above  the  average  of  the  whole 
country  ;  but  the  ration  of  food  taken,  as  a  whole,  is  not  a  very 
large  one,  as  will  be  seen  by  a  reference  to  the  items  in  the  preced- 
ing treatise.  This  table  is  based  on  the  statistics  of  the  food  con- 
sumed by  adult  women  chielly  ;  men  consume  a  larger  ration  of 
meat  and  less  tea,  coffee,  and  sugar. 

It  will  be  observed  that  the  three  products  which  claim  special 
legislation  most  urgently,  to  wit  :  pig-iron,  w^ool,  and  silver  com- 
bined are  worth  only  $189,000,000,  which  is  less  than  the  value 
of  poultry  and  eggs,  and  but  a  small  fraction  of  the  value  of  the 
products  of  the  dairy  in  each  year. 

The  value  of  the  total  consumption  of  the  United  States  may 
now  be  computed  (1885)  at  about  $11,400,000,000.  The  graphical 
line  representing  it  would  be  nearly  six  and  a  half  times  the  upper 
line  shown  in  the  table,  with  which  the  fly-speck  which  represents 
silver  may  be  compared.  More  than  one  half  of  the  silver  produc- 
tion is  purchased  by  the  Treasury  for  coinage. 

The  foregoing  list  of  articles  of  food  and  clothing  amounts  to 
$5,800,000,000  (omitting  raw  cotton  and  raw  wool,  and  treating 
pig-iron  separately).  It  represents  a  somewhat  less  sum  than  is 
probably  paid  by  the  people  of  the  United  States  for  such  articles; 
The  basis  of  the  table,  so  far  as  food  is  concerned,  is  on 
the  standard  of  the  actual  consumption  of  factory  operatives, 
chiefly  women,  at  a  cost  of  23  iVo^-  per  day,  or  $1.67  per  week. 
It  is  probable  that  the  average  cost  in  money  of  the  food  of  adults 
is  more  than  this,  although  it  is  not  probable  that  they  average  as 
good  a  ration  for  their  money,  the  food  of  these  operatives  being 
bought  at  wholesale  prices.  Food,  drink,  and  clothing  cost  the 
consumers  of  this  country  about  $6,500,000,000  per  year  on  the 
basis  of  the  present  population.  Pig-iron,  when  converted  into  its 
final  form  of  bars,  rails,  castings,  bolts,  nuts,  and  the  like,  probably 
adds  $300,000,000,  and  there  still  remain  timber,  stone,  and  all 
material  for  shelter  to  be  added.  As  I  have  stated  the  value  of 
sill  the  products  of   this   country  at   this  time  is  probably  over 


THE  RATE   OF  WAGES f  3I9 

$11,400,000,000 — or,  deducting  the  domestic  consumption  of 
farmers,  our  commercial  product  at  the  point  of  final  consumption 
is  worth  over  $io,ooo,ooo,coo  ;  but,  it  must  be  remembered  that  in 
the  process  of  exchange  and  of  conversion  this  whole  product  will 
have  been  bought  and  sold  twice,  thrice,  or  more  times.  Before 
it  reaches  the  consumer  the  wheat  has  been  sold  by  the  farmer 
to  the  miller,  the  flour  has  been  sold  by  the  miller  to  the  merchant, 
and  by  the  merchant  to  the  baker,  and  the  bread  has  been  sold  to 
the  consumer.  The  business  transactions — the  purchases  and  sales 
of  this  country — must  approximate  $30,000,000,000,  or  between 
five  and  six  hundred  dollars  a  year  per  capita,  in  the  mere  trans- 
actions relating  to  shelter  and  subsistence. 

Whatever  the  final  amount  may  be,  the  prices  are  now  adjusted 
to  the  standard  of  the  gold  dollar,  rated  at  100  cents. 

When  the  standard  is  changed  to  silver  at  82  cents  to  85  cents, 
as  it  surely  will  be  unless  the  coinage  of  legal-tender  silver 
dollars  is  soon  stopped,  the  prices  of  this  immense  volume  of  con- 
sumable commodities  as  well  as  of  all  other  property  not  enumer- 
ated, must  rise  in  just  the  proportion  that  the  standard  of  value  is 
lowered.  This  rise  will  be  very  slow,  because  consumption  has 
been  so  much  reduced  by  uncertainty.  The  probabilities  are  that 
while  this  adjustment  is  in  process  wages  will  keep  where  they  are 
or  go  lower,  while  the  money  cost  of  living  will  become  greater. 
In  such  periods  the  rich  grow  richer  at  the  cost  of  the  poor,  but 
the  principal  loss  falls  on  the  persons  of  moderate  means. 

The  absolute  necessity  of  preparation  for  an  increasing  popula- 
tion may  counteract  these  tendencies  in  a  measure,  but  no 
enterprise  or  vigorous  activity  will  be  possible,  and,  on  the 
whole,  depression  and  want  of  work  will  be  continued,  in  the  face 
of  rising  prices  and  increased  cost  of  subsistence. 

The  legislators  who  sustain  the  present  acts  of  coinage,  which 
are  approved  neither  by  bimetallists  nor  monometallists,  will  be 
responsible  for  the  disturbances  which  will  ensue. 

Having  thus  considered  the  distribution  of  occupations  with 
reference  to  the  Railway  Service  and  the  Silver  Coinage,  we  now 


320  WHAT  MAKES 

come   to   the   apparently  more  complex  but  really  much  more 
simple  question  of 

THE   COLLECTION   OF    THE    NATIONAL   REVENUE. 

It  is  held  by  one  school  that  domestic  industry  will  be  protected 
by  the  imposition  of  duties  under  a  tariff  in  such  a  way  as  to  raise 
the  price  of  such  foreign  articles  as  can  be  made  in  this  country,  in 
order  that  various  arts  may  become  established  which  it  assumed 
might  otherwise  be  of  very  slow  growth,  or  perhaps  might  not  be 
undertaken  at  all. 

It  is  held  by  another  school  that  domestic  industry  will  be  most 
fully  promoted  by  levying  duties  or  taxes  exclusively  on  articles 
which  are  of  voluntary  use,  which  do  not  enter  directly  into  the 
processes  of  domestic  industry,  or  which  cannot  be  produced 
in  this  country  advantageously,  if  at  all. 

It  is  not  the  purpose  of  this  treatise  to  discuss  the  merits  or  de- 
merits of  either  system  but  rather  to  define  the  necessary  condi- 
tions, and  to  state  the  facts  which  must  be  accepted  by  the 
respective  advocates  of  both  systems,  if  any  scientific  result  is  to 
be  reached. 

Three  questions  are  presented  to  which  a  sufficient  answer  can 
be  given  by  an  analysis  of  the  table  of  occupations. 

I  St. — What  proportion  of  the  gainful  occupations  of  the  people 
must  be  carried  on  within  the  limits  of  our  own  territory  because 
they  could  not  be  conducted  as  well  elsewhere  ? 

2d. — What  proportion  of  all  who  are  occupied  depend  upon 
a  foreign  market  for  the  sale  of  their  product  ? 

3d.  What  proportion  of  all  who  are  occupied  could  be  sub- 
jected to  foreign  competition  ? 

Agriculture  is  the  most  important  of  all  occupations.  In  the 
census  year  it  gave  employment  to  7,670,493  persons,  and  prob- 
ably to  a  greater  number,  as  the  Superintendent  of  the  Census 
remarks  that  many  of  those  who  reported  themselves  simply 
as  laborers  were  probably /t/r/^  laborers.  The  census  does  not  in- 
dicate the  proportion  of  persons  to  each  special  crop,  but  if  cpn- 


The  rate  of  wages?  321 

sideration  be  given  to  the  estimate  of  the  crops  at  their  farm  values, 
tHe  total  product  of  agriculture  possessed  a  value  in  the  census  year 
of  $3,726,331,422  ;  or,  with  transportation  added  to  the  place  of 
export,  or  of  wholesale  distribution,  the  total  approximated  $4,000,- 
000,000  in  value.  The  declared  wholesale  value  of  the  products  of 
agriculture  exported  in  the  same  year  was  $685,961,091,  which  is 
17  ^/^  per  cent,  of  the  whole.  At  the  present  time  it  would  be 
somewhat  less.  If  we  apply  this  percentage  to  the  whole  number 
of  persons  listed  specifically  as  occupied  in  agriculture  in  the 
census  year  it  gives  us  1,315,000  persons  engaged  in  domestic 
agriculture  whose  market  was  a  foreign  one.  If  the  number 
occupied  in  agriculture  was  greater,  then  this  number  must  be 
increased. 

On  the  other  hand,  we  find  among  the  products  of  agriculture 
which  could  be  wholly  or  in  any  substantial  part  imported — only 
sugar,  swamp  rice,  a  part  of  the  wool,  tobacco,  barley,  and  hemp, 
and  a  few  minor  articles, — the  possible  import  of  what  was  pro- 
duced here  not  exceeding  $100,000,000,  or  two  and  a  half  per 
cent.  Applying  this  percentage  to  persons,  we  get  192,000  whose 
occupations  might  be  affected  by  changes  in  the  revenue  system. 

If  we  next  consider  the  several  classes  of  occupation,  aside  from 
agriculture,  we  find  that  the  all  of  Class  I,  who  were  engaged 
in  professional  work,  or  as  officers  of  railroad,  insurance,  and  other 
similar  corporations  ;  all  of  Class  II,  who  were  engaged  in  dis- 
tributive work,  as  merchants,  traders,  and  their  employes  ;  sub- 
stantially all  of  Class  IV,  engaged  in  mechanical  work  of  the 
individual  rather  than  of  the  collective  kind  ;  and  all  of  Class  VII, 
laborers  and  miners,  with  the  exception  of  about  32,000  iron 
miners  and  20,000  -coal  miners  supplying  blast  furnaces,  must 
have  lived  and  worked  within  the  limits  of  the  country,  and  in 
such  parts  of  the  country  as  are  consistent  with  the  vocation  of 
each  individual,  because  their  work  could  not  be  done  elsewhere. 

There  remains  Class  IV,  comprising  at  the  utmost  1,740,000 
persons,  engaged  in  collective  factory  work.  Of  this  number  a 
large  portion  of  those  who  were  engaged  in  metal  and  machine 


322  IVHA  T  MAKES 

work,  almost  the  whole  number  employed  in  making  clothing, 
boots,  shoes,  and  hats,  and  by  far  the  largest  portion  of  those  en- 
gaged in  the  lesser  branches  of  collective  factory  work,  such  as 
wood-working,  and  other  kindred  arts,  must  have  followed  their 
work  not  only  within  the  limits  of  the  country  itself,  but  in  such 
particular  part  of  the  country  as  was  best  suited  to  their  special 
work.  Of  the  whole  number  of  this  class,  computed  at  1,740,000, 
possibly  740,000  might  be  in  part  subjected  to  competition  from  a 
foreign  country  ;  to  whom  may  be  added  260,000  agriculturists 
and  miners,  making  1,000,000  in  all. 

Each  person's  judgment  would  vary  somewhat  as  to  the  pro- 
portion of  the  persons  engaged  in  manufacturing,  mining,  and 
agriculture,  whose  product  could  be  imported  at  this  time  if  no 
discrimination  were  used  in  the  imposition  of  duties,  but  it  is  im- 
possible to  reduce  the  problem  to  absolute  terms.  So  long  as 
duties  are  imposed  on  ores,  coal,  wool,  chemicals,  and  other 
articles,  which  enter  into  the  processes  of  domestic  manufactures, 
the  import  of  articles  made  of  iron,  cloth,  and  other  finished  articles 
will  be  greater.  The  proportion  of  all  persons  occupied  who  can 
be  subjected  to  foreign  competition  may  be  estimated  at  between 
four  and  six  per  cent,  of  the  whole  ;  a  proportion  which  repre- 
sented between  700,000  and  1,050,000  persons  in  the  census  year. 

Paying  no  regard  to  the  small  proportion  of  domestic  manufac- 
tures exported,  the  general  result  appears  to  be  that  in  the  census 
year  1,300,000  to  1,350,000  persons  occupied  in  agriculture 
depended  upon  a  foreign  market,  and  from  700,000  to  1,050,000 
were  occupied  in  some  kind  of  production  which  could  have  been 
imported  wholly  or  in  part.  Assuming  the  maximum  in  each 
case,  we  find,  in  round  figures,  2,400,000  persons  employed  whose 
occupations  were  directly  connected  with  or  affected  by  foreign 
commerce.  The  remainder  of  the  working  force,  15,000,000  in 
number,  living  within  our  limits,  were,  of  necessity,  occupied  in 
kinds  of  work  which  could  only  be  done  within  the  same  limits. 
Hence  the  vast  and  necessary  preponderance  of  domestic  over 
foreign  commerce. 


THE.  RATE  OF  WAGES 7  323 

It  will  be  apparent  that  these  conditions  which  exist  in  the 
nature  of  things  must  be  fully  comprehended  before  any  intelli- 
gent legislation  can  be  had  in  respect  to  national  taxation, 
whether  the  revenue  is  to  be  sought  either  under  an  excise  or  from 
a  tariff. 

The  importance  of  our  foreign  commerce  is  not,  however,  to 
be  measured  by  the  ratio  which  it  bears  to  domestic  traffic.  Pos- 
sessing as  we  do  the  most  adequate  resources,  and  the  cheapest, 
because  the  most  effective,  labor  of  the  world,  we  are  enabled  to 
supply  our  own  wants,  and  yet  produce  an  excess  of  staples  which 
the  world  must  have.  Hence  it  follows  that  imports  and  exports 
constitute  the  balance-wheel  by  which  the  price  of  our  whole 
product  might  be  maintained  more  uniformly  than  it  is,  were  it 
not  for  the  obstruction  of  ill-adjusted  taxation.  The  effect  of 
these  obstructive  duties  upon  the  import  of  articles  which  enter 
into  the  processes  of  domestic  industry  is  to  increase  the  general 
cost  of  our  product,  and  to  reduce  its  exchangeable  value  ;  hence 
it  follows  that  the  general  rate  of  wages  is  lower  than  it  would 
otherwise  be,  and  is  also  subject  to  unnecessary  fluctuations. 

Under  the  present  complex  and  onerous  tariff,  which  discrimi- 
nates in  many  ways  against  our  domestic  manufactures,  a  larger 
proportion  of  those  who  are  occupied  in  them  are  subject  to 
foreign  competition  than  would  be  the  case  under  a  well-adjusted 
tariff. 

If  all  the  materials  which  enter  into  the  processes  of  domestic 
industry,  commonly  called  raw  materials,  were  free  of  duty,  as 
well  as  finished  products  which  are  necessary  thereto,  such  as 
chemicals,  drugs,  and  dyestuffs,  the  number  of  persons  who 
could  be  subjected  to  foreign  competition,  by  way  of  importa- 
tions of  manufactured  products  of  like  kind,  would  not  exceed 
about  500,000,  to  whom  may  be  added  not  over  200,000  in  agri- 
culture, mining,  and  metallurgy.  Such  a  policy  would,  on  the  other 
hand,  greatly  promote  the  export  of  manufactures  as  well  as  of  the 
products  of  agriculture,  and  in  this  way  would  increase  the  general 
rate  of  wages  by  widening  the  market,  and  thereby  enabling  the 


324  WHAT  MAKES 

country  to  obtain  a  larger  sum  of  money  for  its  excess  of  produc- 
tion. The  interest  of  every  machine-using  nation,  in  which  wages 
are  naturally  high,  is  to  get  the  benefit  of  the  cheapness  of  its 
highly  paid  labor  by  opening  the  widest  market  by  the  exchange 
of  its  goods  for  products  made  under  less  advantageous  conditions, 
and,  therefore,  at  low  rates  of  wages. 

This  benefit  can  only  be  fully  attained  when  industry  is 
untaxed. 

Duties  upon  finished  goods  which  are  ready  for  final  consump- 
tion rest  upon  an  entirely  different  basis.  They  may  be  so  im- 
posed as  to  yield  a  large  revenue  without  any  material  obstruction 
to  industry  beyond  the  amount  of  the  revenue  itself,  and  it  is  in 
this  adjustment  of  duties  and  taxes  that  the  most  careful  dis- 
crimination is  required  ;  but  this  branch  of  the  subject  is  foreign 
to  the  purpose  of  this  treatise. 

The  conditions  of  industry  in  the  United  States  are  very  differ- 
ent from  those  of  almost  any  other  country,  because  there  is  no 
article  necessary  to  subsistence  which  we  cannot  produce  in  ample 
measure,  if  we  choose  to  do  so.  In  making  this  statement,  tea 
and  coffee  are  placed  among  the  comforts  rather  than  the  necessi- 
ties of  life  ;  aside  from  these  we  could  produce  every  thing  of  any 
considerable  importance.  It  may  be  great  folly  to  undertake  to  do 
so,  because  the  conditions  under  which  sugar,  iron,  jute,  and  many 
other  crude  articles  are  produced  are  very  arduous  and  undesir- 
able, and  in  some  cases  unwholesome.  When  such  articles  can 
be  procured  by  exchange  at  a  lower  cost  than  by  their  domestic 
'  production,  the  advantage  lies  with  the  country  which  is  not 
compelled  to  do  such  work.  The  same  rule  holds  true  with 
respect  to  many  articles  of  a  high  grade  in  which  the  labor  is 
mostly  ill-paid  hand  labor.  We  cannot  afford  to  spend  our  time 
on  such  work  when  the  very  poor  and  ignorant  of  other  countries 
can  do  it  so  well  for  us,  and  can  do  nothing  else  for  themselves. 

Hence  it  follows  that  the  measure  of  our  imports  and  exports 
is  rather  the  out-come  of  our  abundance,  while  in  Great  Britain  it 
is  the  measure  of  her  necessity,  since  her  people  could  not  be 
subsisted  except  for  her  commerce  with  other  lands. 


THE  RATE  OF  WAGES?  32$ 

The  obstructions  which  we  have  interposed  to  the  import  of 
materials  which  enter  into  the  processes  of  domestic  industry, 
such  as  coal,  iron,  salt,  hemp,  jute,  chemicals,  dyestuffs,  timber, 
etc.,  give  a  great  protection  to  the  manufacturers  of  Great  Britain 
so  long  as  these  duties  keep  the  prices  higher  in  this  country  than 
there.  It  matters  not  what  the  absolute  price  may  be,  whether 
high  or  low,  so  long  as  there  is  an  artificial  difference  against  us, 
we  lose  the  benefit  of  our  more  effective  labor  and  give  this  bene- 
fit to  Great  Britain,  her  labor  being  more  effective  and  her  wages 
higher  than  any  other  competitor  on  the  continent  of  Europe.  It 
is  not  to  be  wondered  at  that  Great  Britain  views  with  alarm  any 
change  of  policy  in  the  United  States  which  will  bring  us  into 
direct  competition  with  her  in  her  foreign  markets. 

The  productive  power  of  this  country  can  be  more  adequately 
proved  by  an  analysis  of  the  work  of  a  single  State. 

The  State  of  Ohio  has  been  taken  as  an  example  more  than  once 
in  the  course  of  these  treatises.  It  lies  midway  between  the  East  and 
the  West,  and  far  enough  North  to  be  in  the  temperate  zone,  most 
conducive  to  success  in  manufacturing  enterprises.  It  possesses 
great  resources,  both  in  respect  to  agriculture,  mining,  and  manu- 
facturing. Disregarding  fractions,  the  proportions  of  its  popula- 
tions who  were  engaged  in  gainful  occupations  were  as  follows  : 

Total  number  in  all  occupations,  994,475,  or  one  in  each  3.21 
persons,  against  an  average  one  to  2.90  in  the  whole  country. 

Of  this  number  of  persons  there  were  engaged  in  agriculture, 
397,495  ;  in  professional  and  personal  service,  250,371  ;  in  manu- 
facturing, mechanical,  and  mining  occupations,  242,294  ;  in  trade 
and  transportation,  104,315. 

Again,  disregarding  fractions,  the  proportions  were  almost  the 
exact  average  of  the  whole  country,  to  wit :  40  ^  in  agriculture  ; 
25  ^  in  professional  and  personal  service  ;  24J  ^  in  manufactur- 
ing, mining,  and  mechanical  work  ;  loj  ^  in  trade  and  trans- 
portation. 

If  we  analyze  the  work  of  these  several  classes,  in  order  to  de- 
termine in  what  measure  the  people  of  Ohio  could  be  subjected  to 


326  WHA  T  MAKES 

foreign  competition,  even  including  the  competition  of  the  adjoin- 
ing Dominion  of  Canada,  the  result  may  be  somewhat  surprising. 

First,  with  respect  to  agriculture.  There  is  probably  a  little 
import  of  barley  into  Ohio  from  Canada  for  the  purpose  of 
making  beer.  There  may  be  some  interchange  of  agricultural 
products,  of  fruit  and  the  like  ;  and  perhaps  a  little  exchange  of 
Ohio  spring  wheat  for  Canada  winter  wheat.  But  there  is  no 
crop  of  any  substantial  importance  raised  in  Ohio  which  could  be 
subjected  to  a  serious  foreign  competition,  except  wool. 

The  total  value  of  all  the  products  of  agriculture  in  the  State 
of  Ohio  in  the  year  1883  was  computed  by  the  State  Commissioner 
of  Agriculture  at  somewhat  over  $184,000,000 — which  would  be 
substantially  at  the  average  rate  of  product  to  each  person  occu- 
pied in  agriculture  which  has  been  assumed  throughout  this 
treatise,  /.  e.^  a  little  over  $400  per  year. 

The  wool  clip  of  the  present  year  is  computed  at  24,000,000  lbs., 
worth  about  ^7,000,000,  or  about  4  ^  of  the  whole  product  of 
agriculture.  At  this  ratio,  assuming  that  each  person  raising  wool 
did  nothing  else,  the  proportion  of  those  who  are  engaged  in  agri- 
culture who  depend  upon  wool  for  their  subsistence  would  be  not 
over  i6,oco  in  number. 

In  point  of  fact  a  few  sheep  are  kept  by  many  farmers,  and 
very  few  persons,  except  the  breeders  of  high-priced  rams  for 
breeding  purposes,  depend  in  any  large  measure  upon  sheep- 
growing  or  the  wool  clip. 

In  its  place  Ohio  wool  is  about  the  best  of  its  kind,  and  it 
could  not  probably  be  displaced  by  any  possible  importation  from 
any  other  country  ;  but,  assuming  that  it  were  thus  displaced,  it 
would  affect  the  employment  of  the  people  in  the  proportion  of 
one  person  in  twenty-five  of  all  who  were  occupied  in  agriculture, 
or  of  one  person  in  sixty-two  of  all  who  were  occupied  in  all  em- 
ployments, assuming  that  it  were  their  sole  occupation. 

The  persons  engaged  in  professional  and  personal  service  and 
in  trade  and  transportation  in  Ohio  cannot,  of  course,  be  sub« 
jected  to  foreign  competition. 


THE  RATE   OF  WAGES t  12'J 

We  may  therefore  consider  manufacturing,  mining,  and  the 
mechanic  arts  by  themselves. 

In  the  census  year,  the  entire  number  of  persons  engaged  in 
the  production  of  iron  and  steel  within  the  limits  of  the  State  ofi 
Ohio,  was  a  little  under  20,000,  or  two  per  cent,  of  all  who  were 
occupied  in  gainful  occupations.  A  few  other  branches  of  indus- 
try might  be  subjected  to  foreign  competition,  but  the  whole 
number  in  all  branches  of  mining,  mechanical  work,  and  manufac- 
turing could  not  exceed  25,000.  How  many  of  these  could  be 
absolutely  displaced  only  time  and  experience  could  prove.  But 
assuming  that  the  occupation  of  this  whole  number  were  of  ne- 
cessity altered  by  foreign  competition,  it  could  only  happen  for 
the  reason  that  the  people  of  Ohio  could  procure  more  iron,  steel, 
and  glass  from  some  other  country  by  an  exchange  of  products 
therefor  ;  it  would  follow  of  necessity  that  by  so  much  as  these 
arts  were  given  up,  some  other  arts  would  be  undertaken,  because 
the  people  must  have  iron,  steel,  glass,  and  other  like  commodities, 
whether  produced  by  themselves  or  by  foreigners.  If  they  did 
not  produce  these  articles  themselves  they  must  produce  some- 
thing to  exchange  for  them. 

Summing  up  all  products  of  agriculture  and  all  products  of 
mining  or  manufacturing  which  can  be  imported  into  Ohio  from 
a  foreign  country,  we  find  that  foreign  competition  would  be  lim- 
ited to  less  than  4  to  5  ^  of  all  engaged  in  gainful  occupations, 
while  the  other  95  to  96  fo  live  and  work  within  the  State  of  Ohio 
because  there  is  no  other  place  in  which,  in  their  judgment  or  in 
fact,  their  work  can  be  done  so  advantageously  to  themselves. 

Reference  may  be  made  to  the  details  of  the  occupations  of  the 
people  of  Ohio  in  the  preceding  treatise. 

But  more  significant  are  the  details  of  the  occupations  of  the 
State  of  Pennsylvania,  whose  people  resist  the  remission  of  taxes 
on  the  materials  which  are  most  necessary  in  all  arts,  industries, 
and  occupations,  whether  of  agriculture,  the  mechanic  arts,  or 
manufacturing,  more  urgently  than  the  people  of  any  other  State. 


328 


PFJUA  T  MAKE5 


OCCUPATIONS  IN   PENNSYLVANIA,    188O. 

Agriculture 301,112 

Professional  and  Personal  Service 446,713 

Trade  and  Transportation 179,965 

Apprentices 8,907 

Bakers 6,025 

Blacksmiths 20,276 

Bookbinders ,         ,  2,055 

Boot  and  Shoe  Makers 20,634 

Brewers         ...••••..  I.504 

Brick  and  Stone  Masons z6,2lo 

Brick  and  Tile  Makers  ...,••.  4,504 

Butchers •         •         •         .  9,200 

Cabinet-Makers  and  Upholsterers 6,866 

Carpenters  and  Joiners  .         ......  40,782 

Carriage,  Car,  and  Wagon  Makers          ....  6,026 

Cigar  Makers  and  Tobacco  Workers      ....  8,970 

Coopers 3,852 

Engineers  and  Firemen 1 1,452 

Fish  and  Oysters 598 

Gold  and  Silver  and  Jewellers 2,204 

Harness,  Saddle,  and  Trunk  Makers     ....  3,729 

Leather  Curriers,  etc.    .......  6,020 

Lumbermen,  etc 4,085 

Machinists 14,601 

Millers 5, 902 

Painters  and  Vamishers 13,008 

Plumbers  and  Gas-Fitters 2,621 

Printers 7,877 

Saw-Mill  Operatives 4,619 

Tailors,  Dressmakers,  and  Milliners      ....  49,851 

Tinners 5,264 

Wheelwrights 2,381 

Miscellaneous  arts,  each  small  in  number       .         .         .  67,561         357,584 

Substantially  exempt  from  foreign  competition       .         .  1,285,374 

Subject  in  part  to  the  competition  of  a  product  of  like 

kind,    which   could  be   imported   from    a    foreign 

country  ; 

Clerks  and  Book-Keepers,  Manf'g  Co's          .         .         .  1,668 

Cotton,  Woollen,  and  Silk  Mill  Operatives     .         .         .  44,746 


THE  RATE  OF  WAGES f  329 

Employes,  Manfg  Go's  not  specified     ....  3.995 

Iron  and  Steel  Workers 33.628 

Manufacturers  and  Officials,  Manfg  Go's       .         .         .  6,740 

Mill  and  Factory  Operatives,  not  specified     .         .         .  6,701 

Miners 69,415 

Paper  Mill  Operatives 2,176 

Ship  Garpenters,  etc 1,624         170.693 

Total 1,456,067 

In  the  foregoing  classification  it  may  be  admitted  that  a  small 
portion  of  those  who  are  listed  as  blacksmiths,  carpenters,  and 
who  are  engaged  in  transportation,  and  in  the  miscellaneous  list 
covering  glass,  chemicals,  etc.,  should  be  added  to  the  list  of 
persons  subject  in  part  to  foreign  competition  ;  but  on  the  other 
side  all  clerks,  etc.,  of  manufacturing  companies,  all  manufac- 
turers, mill  and  factory  operatives  not  specified,  and  officials  of 
manufacturing  companies  have  been  placed  in  the  list  of  those 
who  are  subject  in  part  to  foreign  competition.  Foreign  compe- 
tition is  therefore  narrowed  down  to  about  150,000  persons  en- 
gaged in  mining,  metallurgy,  textiles,  paper,  glass,  and  chemicals. 

The  proportion  of  miners  engaged  on  iron  ore  and  coal  for 
blast  furnaces  is  less  than  one  half  the  whole  number.  A  large 
portion  of  the  cotton  and  woollen  fabrics  are  coarse  goods  which 
can  be  made  here  at  a  lower  cost  than  in  Europe,  and  a  large  por- 
tion of  the  iron  and  steel  workers  would  have  more  work  rather 
than  less,  if  iron  ores,  pig-iron,  and  ingot  steel  were  free  of  duty 
or  tax. 

It  would  be  difficult  to  prove  that  more  than  one  half  the  list 
of  those  whose  industry  might  be  subject  in  part  to  foreign 
competition  would  be  for  a  time  adversely  affected,  even  if  a 
policy  exempting  the  materials  which  enter  into  the  processes 
of  domestic  industry  from  duties  was  adopted,  such  as  pig-iron, 
coal,  wool,  timber,  chemicals,  salt,  and  the  like,  while  all  other 
arts  would  be  promoted.  One  half  would  number  85,000  or  less 
than  six  per  cent,  of  the  whole  number  o(  persons  occupied  in 
all  gainful  occupations  in  this  State. 


330  WHAT  MAKES 

It  therefore  follows  that  so  long  as  a  tax  is  continued  upon  the 
import  of  a  foreign  article  which  is  needed  in  the  processes  of 
domestic  industry,  by  which  the  price  of  that  article,  however  low 
it  may  be,  is  yet  kept  higher  than  it  is  in  Europe,  the  manufactur- 
ers of  this  country  are  kept  at  a  relative  disadvantage,  and  per- 
haps no  art  suffers  so  much  from  this  cause  as  the  art  of  ship- 
building on  the  Delaware  River  in  Pennsylvania  itself. 

It  indicates  a  singular  delusion  when  out  of  1,456,067  persons 
occupied  in  all  gainful  employments  in  the  State  of  Pennsylvania 
in  the  census  year,  not  over  30,000  to  35,000  were  employed  in 
mining  iron  ore,  in  mining  coal  for  blast  furnaces,  and  in  the  con- 
version of  these  materials  into  pig-iron.  It  should  yet  appear 
from  the  public  utterances  of  the  public  men  of  this  State,  as  if 
the  people  were  incapable  of  sustaining  themselves  if  this  undesir- 
able occupation  were  not  specially  promoted. 

Pennsylvania  possesses  agricultural  resources  unequalled  in 
this  country,  timber,  oil,  fuel,  power,  great  navigable  rivers,  and 
every  other  advantage  which  nature  can  give  her  ;  but  yet  subjects 
them  all  to  a  grave  disadvantage  in  order  to  attempt  to  sustain, 
by  purely  artificial  and  obstructive  methods,  a  branch  of  work 
which  is  not  desirable  in  itself  in  its  necessary  conditions,  and 
which  is  now  being  subjected  to  a  destructive  domestic  competi- 
tion, perhaps  prematurely  forced  into  action  by  the  very  policy 
which  she  herself  has  insisted  upon. 

Although  it  is  not  the  purpose  of  this  treatise  to  enter  into  the 
general  discussion  of  the  question  of  taxation,  yet  it  has  become 
apparent  that  no  treatise  upon  the  forces  which  make  the  rate  of 
wages  can  be  considered  complete  which  does  not  take  cognizance 
of  the  taxation  imposed  upon  coal,  wool,  timber,  and  pig-iron, 
whereby  this  country  is  placed  at  a  relative  disadvantage  com- 
pared to  almost  all  others. 

Such  taxes  upon  the  very  sources  and  foundations  of  industry 
cannot  fail  to  reduce  the  rate  of  wages  by  restricting  the  sale  of 
our  products  of  other  kinds  while  at  the  same  time  increasing 
their  cost. 


THE  RATE  OF  WAGES?  33 1 

No  determination  of  other  questions  is  possible  until  the  power 
of  the  representatives  of  pig-iron,  wool,  and  silver  to  dictate  the 
policy  of  both  political  parties  is  taken  away,  nor  until  their  influ- 
ence is  reduced  to  the  measure  of  their  importance.  Their 
relative  importance  is  easily  measured  by  a  very  commonplace 
standard. 

Their  gross  annual  value  is  now  at  the  maximum  less  than 
$200,000,000,  or  less  than  two  per  cent,  of  our  annual  product. 

Each  one  taken  by  itself  represents  a  less  product  than  the  pro- 
duct of  eggs  from  the  hen  yards  of  the  country,  and  the  three 
together  barely  equal  in  value  the  product  of  eggs  and  poultry 
combined. 

So  long  as  their  domination  is  submitted  to,  the  adjustment  of 
the  tariff  is  impossible.  No  advocate  of  free  trade  can  ask  a 
heavy  reduction  of  duties  on  fabrics  which  are  ready  for  final  con- 
sumption, when  the  materials  of  which  they  are  composed  are  sub- 
ject to  excessive  duties  ;  and  no  advocate  of  the  protective  policy 
can  make  even  a  reasonable  concession  so  long  as  manufacturers 
of  iron,  steel,  woollens,  worsteds,  and  other  fabrics  are  subjected  to 
such  a  burden  as  the  present  tax  on  materials.  No  determination 
can  be  reached  as  to  what  is  the  true  or  possible  maximum  rate  of 
wages  in  this  country  so  long  as  all  our  workmen  are  placed  at 
such  a  disadvantage  as  is  imposed  upon  them  by  heavy  taxes  on 
the  most  necessary  articles  which  enter  into  the  processes  of  their 
industry. 

Entirely  aside  from  these  temporary  questions  of  currency  and 
taxation,  we  may  again  question  the  table  of  occupations  to  see 
why  the  average  production  is  so  small  as  50  to  55  cents  per  day 
per  capita,  or  $1.45  to  $1.60  per  day  to  each  person  occupied  in 
gainful  work  ;  and  also  why,  small  as  it  is,  it  is  so  unequally  dis- 
tributed. 

What  has  this  inequality  to  do  with  the  alleged  monopoly  of 
land  by  private  owners  which  is  said  to  exist  by  Henry  George 
and  other  sincere  reformers  of  the  same  school. 

For  this  purpose  we  may  limit  our  consideration  to  the  United 


332  WHAT  MAKES 

States,  where  the  purchase  and  sale  of  land  has  been  made  more 
simple  and  free  from  legal  obstruction  than  in  any  other  country, 
except  some  of  the  colonies  of  Australia  where  there  is  reason  to 
suppose  that  even  a  better  and  more  simple  mode  of  sale  and 
transfer  of  land  exists  than  with  us.  The  fault,  if  any,  in  the 
system  of  private  ownership  cannot  be  determined  by  a  study  of  the 
condition  of  Ireland, — a  small  island  which  is  still  subject  to  the 
disabilities  caused  by  despoiling  private  owners  under  the  alleged 
right  of  conquest  long  years  since  ;  nor  by  a  study  of  English 
land,  burthened  as  it  is  by  rights  of  dower,  settlements,  and  entails 
to  such  an  extent  that  actual  ownership  of  the  larger  part  of  the 
soil  has  practically  ceased  to  exist,  most  of  it  being  held  under  a 
life  estate  only  ;  nor  by  a  study  of  the  conditions  of  most  of  the 
continental  states  of  Europe,  where  compulsory  subdivision  of  land 
has  in  great  measure  prevented  the  wide  application  of  capital 
to  its  most  productive  use. 

In  this  country  a  very  large  portion  of  the  soil  has  been  and 
still  is  under  State  or  National  ownership  ;  it  does  not  need  to  be 
Nationalized^  because  it  is  Nationalized  already.  It  has  long  been 
practically  free  and  open  to  homesteaders,  preemptors,  squatters, 
graziers,  ranchers,  and  the  like,  and  all  our  efforts  have  been  to 
get  it  into  private  ownership  or  occupancy,  in  order  that  it  might 
be  put  to  productive  use. 

Even  a  large  portion  of  the  land  held  in  private  ownership  has 
been  and  is  practically  open  to  occupation  and  use  at  so  small  a 
price  as  to  be  substantially  free  land.  A  large  portion  of  the 
mountain  section  of  the  South,  unequalled  in  its  potentiality  for 
production,  or  in  natural  conditions  favorable  to  health  and  in- 
dustry, has  been  and  may  still  be  purchasable  at  from  twenty 
cents  to  two  dollars  per  acre  in  fee  simple. 

It  follows  that  if  there  is  want  in  the  midst  of  abundance,  and 
if  the  poor  of  our  cities  are  crowded  into  slums,  it  is  not  to  be  at- 
tributed to  lack  of  free  land.  In  fact,  we  waste  the  powers  of  the 
land  that  is  in  use,  for  the  mere  reason  that  there  is  so  much  of  it 
not  yet  occupied  for  use,  and  this  wasteful  method  may  be  de- 


THE  RATE   OF  WAGES?  333 

fended  as  the  most  economical  for  the  time  being.  Again  the 
graphical  method  may  be  employed  to  make  this  matter  plain. 

In  the  following  table  I  have  dealt  in  a  rough  and  ready  way 
with  the  areas  occupied,  or  which  might  serve,  for  all  our 
great  crops.  The  area  of  the  United  States,  omitting  Alaska,  is 
a  trifle  less  than  3,000,000  square  miles. 

In  a  broad  and  general  way  we  may  assume  that  one  half  this 
area  is  good  arable  land,  one  quarter  good  pasture  land,  and 
one  quarter  forest,  mountain,  and  mining  territory. 

TOTAL    AREA. 

3, 000, OCX)  square  miles 

Graphically  shown  by  the  four  lines. 

Mountain  and  Timber. 
1-4 


Grazing. 
1-4 


Arable. 


INDIAN    CORN    FIELD. 

112,500  square  miles. 

At  25  bushels  to  an  acre  this  area  produces  1,800,000,000  bushels.  This 
com  is  largely  converted  into  pork  at  the  rate  of  5  lbs.  of  corn  to  one  pound  of 
pork.  Assuming  one  thousand  million  bushels  thus  converted,  and  the  rest 
used  for  human  or  cattle  food,  the  product  of  pork  would  be  equal  to  18,500,000 
casks  or  its  equivalent  in  bacon  ;  which  would  give  nearly  one  cask  of  pork  of 
300  lbs.  to  each  head  of  a  group  of  three  persons  per  year,  or  100  lbs.  per  capita. 


334  ^^A  T  MAKES 

WHEAT     FIELD. 

60,000  square  miles. 

At  13  bushels  per  acre  this  little  area  yields  a  little  over  500,000,000  bushels. 
Setting  aside  an  ample  portion  for  seed  this  quantity  would  give  over  8o,ooo,oog 
persons  one  barrel  of  flour  per  year. 

COTTON    FIELD. 
20,000  square  miles. 

I 

At  the  vi^retched  average  of  only  half  a  bale  to  an  acre  this  little  patch  yields 
6,400,000  bales  in  a  year. 

WOOL. 
What  the  actual  area  of  sheep  pasturage  is  no  man  can  tell, 
because  the  area  of  land  absolutely  free  to  graziers  and  ranchers  is 
so  large  that  no  question  of  area  has  arisen  until  within  a  very 
short  time  ;  but  the  end  of  this  wasteful  and  archaic  method  can 
be  foreseen.  When  the  cur-dog  shall  have  been  muzzled,  or  when 
dogs  shall  have  been  declared  ferce  naturcE^  it  will  be  easily  possi- 
ble to  sustain  four  sheep  to  an  acre  over  wide  areas  of  unoccupied 
land  in  the  East  and  South  as  well  as  in  the  far  West  ;  this  would 
require  a  sheepfold  of 

40,000  sq.  miles, 

sustaining  102,400,000  sheep,  which  at  only  4  lbs.  each  would  yield  more  wool 
than  we  now  consume  of  all  kinds  both  domestic  and  foreign, 

DAIRY  FARMS  AND  HEN  YARDS. 

In  1880  the  number  of  milch  cows  was  estimated  at  12,500,000, 
and  the  product  of  eggs  was  computed  at  500,000,000  dozen, 
valued  at  $80,000,000.  Over  how  wide  a  range  of  pasturage  the 
milch  cows  ranged  it  is  impossible  to  say,  but  almost  within  the 
period  which  has  elapsed  since  1880  it  has  been  proved  entirely 
possible  to  feed  two  cows  one  year  on  the  corn-stalks  saved  in 
pits  which  can  be  raised  on  one  acre  of  fairly  good  land,  if  to 
this  green  fodder  be  added  a  ration  of  meal  made  from  the  cotton 


THE  RATE  OF  WAGES?  33$ 

seed  which  was  almost  all  wasted  until  a  very  recent  time  and  is 
yet  saved  in  only  a  very  small  proportion.  But  in  order  to  be 
safe  we  may  reverse  this  ratio,  and  assigning  only  one  cow  to  two 
acres  we  may  greatly  increase  our  present  ration  of  milk,  butter, 
and  cheese,  with  the  hens*  eggs  thrown  in. 

A  Dairy  Farm  and  Hen  Yard 
of  60,000  square  miles, 

at  I  cow  to  2  acres,  will  sustain  19,200,000  cows. 
BEEF. 

The  relative  importance  of  meat  in  the  subsistence  of  our 
people  has  been  shown  in  the  foregoing  table.  A  large  portion 
of  our  beef  is  now  produced  by  almost  semi-barbarous  methods 
on  the  far-distant  plains  ;  but  as  population  increases  this  rude  way 
must  give  place  to  more  civilized  and  humane  modes,  and  our 
beef  must  be  produced  near  its  place  of  consumption.  Many 
Eastern  farms  which  had  ceased  to  be  profitable  have  lately  been 
converted  into  beef  factories^  upon  which  steers  are  raised  and 
fattened  on  ensilage  and  corn-meal.  Provision  has  been  made  for 
the  cornfield,  and  if  pitted  forage  is  as  fully  justified  on  a  broad 
scale  as  it  has  been  in  the  successful  experiments  of  many  able 
men  who  have  applied  brains  and  capital  to  the  use  of  land,  it 
would  be  necessary  to  assign  only  a  small  area  to  beef. 

60,000  square  miles, 

at  500  lbs.  of  meat  to  an  acre,  would  yield  nearly  one  pound  of  beef  per  day 
to  our  present  population  (reckoning  two  children  as  one  adult). 

If  these  propositions  can  be  sustained,  it  follows  that  our  pres- 
ent crops  of  corn,  wheat,  and  cotton,  and  a  very  much  increased 
product  of  the  dairy  and  poultry-yard,  as  well  as  of  meat  and 
wool,  can  be  raised  on 

352,500  square  miles, 

or  upon  twelve  per  cent,  of  the  total  area  ;  and  even  this  assign- 
ment of  land    is  nearly   double  what  might  be  required  if  the 


336  WHAT  MAKES 

intensive  system  of  farming  were  adopted  by  men  of  sufficient 
intelligence  and  capital  to  conduct  all  parts  of  the  work  in  a 
reasonably  good  way. 

It  is  held  that  in  the  face  of  this  demonstration  the  charge  that 
poverty  is  now  to  be  attributed  to  monopoly  of  land  in  this  country 
is  utterly  disproved,  and  that  the  explanation  of  extreme  poverty 
must  be  sought  in  other  directions.  It  is  painfully  apparent  that 
extreme  poverty  is  to  be  found  chiefly  among  those  who  are 
foreign  born,  but  there  is  as  much  free  land  open  to  them  as 
there  is  to  the  native  born — enough  and  to  spare  for  both. 

It  may  therefore  well  be  questioned  whether  the  more  intense 
and  widespread  poverty  of  European  countries  can  be  attributed 
mainly,  even  if  in  part,  to  the  systems  of  land  tenure  there  pre- 
vailing, if  the  same  phenomena  are  to  be  found  in  the  heart  of  the 
great  cities  of  this  country  where  there  is  so  much  free  land  as  in 
those  of  countries  where  land  is  fully  occupied. 

Want  oppresses  New  York,  Boston,  and  Philadelphia,  of  the 
same  kind  if  not  in  as  great  a  degree  as  London,  Paris,  and  Berlin. 
Yet  in  the  United  States  land  is  in  excess  of  the  utmost  need  ;  in 
England  it  is  held  by  the  few  rather  than  the  many,  and  in  France 
and  Germany  by  the  many  rather  than  by  the  few.  It  follows, 
almost  as  a  matter  of  necessary  deduction  from  these  phenomena, 
that  the  great  problem  is  the  distribution  of  the  product  of  the  soil 
rather  than  the  distribution  of  the  soil  itself.  The  greater  part 
of  those  who  only  suffer  in  cities  might  starve  if  removed  therefrom 
and  placed  upon  unoccupied  land  where  they  would  depend  only 
upon  themselves  for  subsistence. 

What  other  reason  can  there  be  for  the  very  poor  to  gravitate  to 
the  cities,  if  the  struggle  to  obtain  food  and  shelter  is  not  a  little 
less  severe  there  than  it  would  be  in  the  country  ? 

In  order  that  material  welfare  may  exist  at  all,  labor  and  capital 
must  both  be  applied  to  land.  Land  is  valueless  without  labor — 
labor  is  almost  helpless  without  capital.  Is  not  this  the  reason 
why  the  unemployed  flock  to  the  cities  where  the  capital  is,  and 
never  go  to  the  free  land  unless  moved  there  and  sustained  by  the 


THE  RATE   OF  WAGES?  337 

capital  of  others  until  they  can  possess  land  and  capital  of  their 
own  ? 

I  have  endeavored  to  show  the  function  of  capital  when  invested 
in  the  mechanism  of  production  and  distribution.  We  may  now 
measure  the  results  of  its  application  and  attempt  to  mark  the 
point  which  we  have  reached  in  our  progress  toward  general  welfare. 

In  the  consideration  of  the  following  table  it  must  be  remem- 
bered : 

First.  That  the  money-cost  of  food  and  drink  is  probably 
more  than  this  table  gives,  because  the  average  working-man  buys 
at  retail  on  less  advantageous  terms  than  are  obtained  by  the 
managers  of  factory  boarding-houses,  who  buy  food  at  wholesale. 

Second.  That  the  estimated  consumption  of  textiles  in  the 
form  of  clothing,  carpets,  laces,  embroideries,  and  all  other  forms, 
is  a  maximum  estimate. 

Third.  That  the  estimated  cost  of  shelter  for  the  increase  of 
population  is  an  approximate  one  only,  for  which  there  are  but 
few  actual  data  known. 

Proportionate  expenditure  of  the  people  of  the  United  States 
in  1884  for  food,  drink,  and  clothing,  and  for  additional 
shekcr  for  the  increase  of  population. 

1.  Food,  at  the  average  ration  of  factory  operatives  in  New  Eng- 

land and  the  Middle  States        ......     $4,340,500,000 

Drink,  as  recently  computed  by  David  A.  Wells  .         .         .  474,823,000 

Total $4,815,323,000 

2.  Clothing  ready  for  use,  carpets,  blankets,  laces,  and  all  other 

textile  fabrics  on  the  basis  of  the  domestic  production  and 
import  of  the  census  year  with  the  cost  of  conversion  and 
distribution  added    ........     $1,500,000,000 

3.  Shelter  for  an  increase  of  2,000,000  on  the  basis  of  a  dwell- 

ing or  part  of  a  dweUing  for  each  family  of  five,  costing 

$500 $200,000,000 

There  are  no  available  data  for  ascertaining  the  cost  of  keeping 
dwellings  in  repair  or  of  maintaining  existing  shelter  by  the  sub- 
stitution of  new  for  old  :  but  from  all  the  statistics  attainable  it 


338  IVHA  T  MAKES 

may  be  fairly  computed  that  the  total  value  of  all  the  dwellings 
in  existence  at  this  time,  or  at  a  given  time,  for  the  use  and  occu- 
pancy of  all  the  wage-earners  and  small  farmers  of  the  country, 
would  be  little,  if  any  more  than  the  annual  market  value,  at  the 
place  of  consumption,  of  the  food  and  <^rink  consumed  by  them. 

In  other  words,  in  the  foregoing  tables  I  have  based  all  the 
figures  on  a  population  of  57,000,000,  equal  in  consuming  power  to 
50,000,000  adults.  In  such  a  population  there  would  be  substan- 
tially 19,650,000  persons  occupied  in  all  gainful  occupations,  of 
whom  over  18,000,000  would  be  wage-earners  or  small  farmers, 
representing  at  least  nine  tenths  of  the  actual  consumption  of  the 
country  and  sustaining  52,500,000  of  the  population.  If  the 
shelter  of  each  one  of  these  persons  is  worth  $100,  the  value  of 
working-men's  dwellings  would  be  $5,200,000,000,  or  but  little 
more  than  the  estimated  annual  cost  of  food  and  drink. 

Assuming  5  per  cent,  per  annum  for  repairs  and  maintenance, 
we  get  $260,000,000,  which  being  added  to  the  computed  cost  of 
new  dwellings,  gives  the  proportion  of  the  cost  of  working-men's 
shelter  as  compared  to  the  cost  of  food  and  clothing.  How  much 
should  be  added  for  rent  paid  by  those  who  do  not  own  their 
dwellings  would  not  form  a  part  of  this  branch  of  the  subject. 

What  I  wish  to  bring  out  is  this  :  Out  of  an  estimated  product 
of  the  present  population,  at  the  same  ratio  as  that  used  in 
the  treatise  on  wages — to  wit,  $11,400,000,000  in  1885  against 
$10,000,000,000  in  the  census  year. 

Food  and  drink  take  up,  at  the  minimum,  about      .         .         .  $5,000,000,000 

Clothing,  etc.,  at  the  maximum 1,500,000,000 

Repairs,  maintenance,  and  construction  of  dwellings  for  work- 

iilg  people 460,000,000 

Repairs  and  construction  of  dwellings  for  the  well-to-do  at 

double  rates 40,000,000 

Accounted  for         .         .         .     $7,000,000,000 

Leaving  $4,400,000,000  to  be  accounted  for  in  the  consumption  of 
all  other  articles  aside  from  food,  drink,  clothing,  and  shelter.    Out 


THE  RATE   OF  WAGES?  339 

of  the  distribution  of  this  remainder  would  come  the  luxuries  of 
the  rich, — the  comforts  of  the  well-to-do,  and  all  our  additions  to 
capital  and  to  the  savings  of  the  people. 

But  in  this  analysis  it  will  be  observed  that  the  proportion  of  the 
total  expenditure  assigned  to  food  is  far  short  of  that  which  is  the 
well-ascertained  proportion  in  workmen's  families  both  in  this 
country  and  in  Europe,  which  is  fifty  per  cent,  of  their  income 
in  respect  to  the  better  class,  and  sixty  per  cent,  in  the  lower 
grade.  At  fifty  per  cent,  of  our  estimated  gross  income,  food  and 
drink  costs  $5,700,000,000. 

What,  then,  is  the  conclusion  ?  Is  it  not  that  even  in  this  sparsely 
populated  land,  of  almost  unlimited  potentiality  in  its  production  of 
grain  and  meat,  more  than  one  half  the  struggle  for  life  is  still  a 
mere  struggle  for  food  ?  Can  this  low  plane  of  mere  existence, 
which  many  fail  even  to  attain,  be  attributed  to  monopoly  of  land  ? 
to  institutions  established  by  law  ?  or  to  causes  wholly  remediable 
by  legislation  ?  If  not,  wherein  do  we  fail,  in  spite  of  our  much- 
vaunted  civilization  ? 

Again,  we  must  refer  to  the  table  of  occupations,  and  in  the  sort- 
ing of  all  according  to  their  work  are  we  not  compelled  to  admit 
that  a  miserably  small  proportion  have  become  individually  capable 
of  making  adequate  use  of  the  vast  resources  which  have  been 
placed  at  our  disposal?  With  no  lack  of  land,  of  capital,  of 
education,  or  of  opportunity,  why  is  it  that  more  than  one  half  of 
every  thousand  who  are  occupied  should  be  found  in  the  position 
of  small  farmers  working  harder  than  their  hired  men  ;  or  in  that 
of  laborers,  domestic  servants,  waiters,  and  the  like  ?  Is  not  the 
only  remedy  to  be  found  in  the  slow  development  of  individual 
capacity  while  the  drudgery  can  only  be  alleviated  by' the  rapid 
and  safe  application  of  capital  ? 

The  wretched  hypothesis  of  Malthus  has  no  place  here — neither 
has  it  been  historically  sustained  anywhere.  Modern  sanitary 
science  has  curbed  the  pestilence  ;  famines  have  become  sporadic 
and  of  little  general  effect  ;  war  has  reduced  production  in  vastly 
greater  measure  than  it  has  checked  population. 


340  WHAT  MAKES 

In  the  light  of  modern  science  and  experience,  a  rule  might  be 
substituted  for  this  atheistic  hypothesis  which  may  be  formulated 
as  follows  : 

Savai^e  inan^  or  even  semi-civilized  man^  while  still  subjected  to  the 
burthen  of  standing  armies  and  of  passive  war,  tends  to  increase 
faster  than  the  mea7is  of  subsistence  can  be  supplied ;  under  such  con- 
ditions, pestilence  or  famine  may  afford  a  necessary  relief.  But 
civilized  man,  freed  from  semi-barbarous  conditions,  and  dwelling  in 
peace,  provides  means  of  subsistence  in  far  greater  measure  than  is 
required  by  increase  in  7iumbers. 

Yet,  although  what  may  be  called  the  higher  laws  which  make 
for  abundance  have  only  yet  been  applied  in  very  limited  degree, 
there  has  not  been  a  decade  since  the  so-called  law  of  population 
of  Malthus  was  first  propounded  in  which  it  has  not  been  disproved 
by  a  much  greater  increase  in  the  world's  means  of  subsistence 
than  in  the  population  ;  subject,  of  course,  to  isolated  cases  where 
there  has  been  what  may  be  called  an  artificial  congestion  of  igno- 
rant human  beings  capable  only  of  being  scattered  by  hunger,  as 
in  Ireland  in  1846. 

Neither  has  the  Ricardian  theory  of  rent  nor  the  opposite 
theory  of  Henry  C.  Carey  found  any  sustaining  facts  in  this  coun- 
try ;  but  a  very  different  formula  would  be  required  here.  It 
might  be  put  somewhat  in  this  form  : 

Rent  is  the  tribute  which  valueless  land  renders  in  proportion  to 
the  intelligence,  capital,  and  industry  which  are  applied  to  its  culti- 
vatio7i,  use,  or  occupancy. 

If  land  is  devoted  to  agriculture,  the  rent  which  will  accrue  to 
the  owner  who  cultivates  it  himself,  or  which  can  be  paid  by  the 
tenant,  will  be  the  produce  which  is  returned  by  the  soil  over  and 
above  the  force  expended  upon  it — which  force  may  consist  of 
labor  and  capital  in  varying  proportions.  The  force  expended  on 
originally  fertile  land  may  be  almost  wholly  labor — upon  poorer 
land  it  may  be  almost  wholly  capital  ;  the  measure  in  terms  of 
money  of  these  two  forces  may  be  the  same  and  the  value  of  the 
product  may  be  the  same,  while  the  intrinsic  properties  or  fertility 
of  the  soil  may  have  been  very  different. 


THE  RATE  OF  WAGES?  34I 

If  land  is  occupied  for  other  purposes,  rent  will  be  the  measure 
of  the  advantage  of  position,  or  of  the  efficiency  of  the  capital 
which  is  used  upon  it. 

The  theory  of  Ricardo,  in  the  judgment  of  the  writer,  is  based 
upon  the  idea  that  the  soil  is  a  mine,  while  in  fact,  it  is  now  treated 
more  as  a  laboratory  ;  hence  farming  has  become  rather  a  matter 
of  brains  than  of  muscle.  Intelligence  and  capital  rather  than 
labor  are  now  the  principal  factors  in  successful  agriculture. 

It  is  not,  however,  my  purpose  to  deal  with  the  views  of 
somewhat  insular  economists  like  Malthus  and  Ricardo,  to  whom 
the  forces  of  the  railway,  the  steamship,  and  of  modern  chemistry 
were  alike  unknown  ;  nor  with  those  of  doctrinaires  like  Carey, 
who  dwarfed  a  really  observant  mind  to  the  petty  measure  of  a 
purely  selfish  policy  in  respect  to  foreign  commerce. 

The  single  question  presented  to  us  is  this  :  Have  we  yet 
any  statistical  or  historical  bases  by  means  of  which  we  can 
solve  the  apparently  simple  problem  of 

WHAT    MAKES    THE    RATE    OF    WAGES? 

If  no  fully  affirmative  reply  can  yet  be  given,  still  great  progress  is 
being  made.  The  science  of  census-taking  has  been  developed  in 
admirable  measure  by  Walker,  Wright,  and  their  efficient  assistants 
and  coadjutors.  Bureaux  of  the  statistics  of  labor  are  doing  most 
excellent  work  in  several  States  and  will  soon  be  supplemented  by 
.the  National  Bureau.  The  work  of  Mr.  Jos.  Nimmo,  Jr.  in  the 
Government  Bureau  of  Statistics  leaves  little  to  be  desired  ;  while 
the  State  Reports  of  Railroad  Commissioners,  supplemented  by  the 
Manual  of  H.  V.  Poor,  give  more  information  on  that  branch  of 
distribution  than  can  be  found  in  any  other  country. 

In  England  great  progress  has  been  made  in  statistical  science, 
as  well  as  in  Germany  and  other  continental  states. 

Since  the  first  edition  of  this  book  was  issued  a  very  valuable  re- 
port upon  "  Labor  in  Europe  "  has  been  issued  by  the  State  De- 
partment.   It  is  evident  that  an  excellent  beginning  has  been  made 


342  WffA  T  MAKES 

in  the  investigation  of  the  coiadition  of  laborers  in  other  lands,  by 
American  consuls. 

The  volume  just  issued  gives  very  full  information  as  to  the  rates 
of  wages,  the  cost  of  food,  rents,  and  other  matters  which  are  of 
the  utmost  value  :  but  the  volume  is  incomplete,  as  are  most  of  the 
reports  of  the  consuls,  in  not  giving  any  clue  to  the  bearing 
of  these  facts  upon  the  cost  of  production  of  the  most  important 
commodities  in  the  exchange  of  which  this  country  is  interested. 

The  volume  shows  conclusively  the  very  much  greater  share  of 
a  larger  product  which  the  workmen  of  this  country  attain,  whether 
measured  in  terms  of  money — /.  e.,  in  high  rates  of  wages, — or  in 
what  the  money  will  buy  ;  it  also  proves  that  the  best  conditions, 
next  to  this  country,  are  attained  in  Great  Britain,  while  the  scale 
of  wages  becomes  progressively  lower  and  lower  as  we  pass  to  the 
less  productive  countries  of  the  continent,  where  longer  hours, 
more  arduous  conditions,  and  heavier  burthens  yield  less  results 
in  quantity  of  product  and  proportion  of  wages. 

Secretary  Frelinghuysen's  attention  has  evidently  been  called  to 
the  necessary  extension  of  the  work  which  has  been  so  well  begun 
in  his  department.     In  the  conclusion  of  his  report  he  says  : 

"  There  are  certain  natural  and  artificial  conditions  which 
so  largely  affect  the  direct  conditions  of  wages  as  to  be  entitled  to 
consideration  in  any  analytical  examination  of  the  great  questions 
of  labor  ;  but  from  their  abstruseness  they  are  less  evident  to  the 
general  mind  and  more  debatable  than  the  simple  relations  shown 
in  the  reports  of  the  consuls  and  summarized  in  this  letter.  It 
would  be  a  legitimate  field  of  inquiry  to  ascertain  what  are  the 
conditions  which  enable  England  to  manufacture  machinery  and 
other  products  at  less  prices  than  similar  goods  can  be  manu- 
factured in  France,  and  at  prices  equal  to  those  in  Germany,  while 
the  rates  of  wages  paid  to  the  workmen  engaged  in  those  manufactures 
in  England  are^  on  the  whole^  higher  than  those  paid  for  similar  labor 
in  France^  and  more  than  double  those  paid  in  Germany.*' 

The  italics  are  my  own,  and  the  Secretary  might  have  added  ; 
"  while  the  hours  of  labor  are  much  less  per  day." 


THE  RATE   OF  WAGES f  343 

It  is  greatly  to  be  hoped  that  this  excellent  work  of  the  State 
Department  will  be  continued.  It  appears  that  a  report  by  Consul 
Williams,  of  Rouen,  will  soon  be  given,  in  which  both  the  rates  of 
wages  and  the  cost  of  labor  in  a  locomotive  engine  will  be  given. 

It  would  not  be  difficult  to  frame  the  instructions  to  all  consuls 
in  such  a  way  that  each  might  report  in  a  similar  manner  on  some 
given  unit. 

For  instance  in  Oldham,  on  the  rates  of  wages  paid  and  the  cost 
of  labor  on  a  pound  of  No.  32  cotton  twist. 

In  Blackburn,  on  the  cost  of  labor  and  rates  of  wages  in  some 
described  article  of  woven  cotton  fabric. 

In  Yorkshire,  Belgium,  and  Germany,  on  a  i6-oz.  cassimere. 

In  Mid-Lothian,  on  a  ton  of  wheat. 

In  Newcastle,  on  a  ton  of  coal. 

In  Glasgow,  on  a  ton  of  iron. 

In  Germany,  on  a  ton  of  "  basic  "  steel,  or  steel-wire  rods. 

If  such  reports  were  accompanied  by  samples  showing  the  fabric, 
the  mode  of  preparing  for  market,  and  other  matters — to  be 
deposited  in  the  Smithsonian  Institute, — the  reports  would  leave 
little  to  be  desired.  From  these  specific  statements  in  regard  to 
certain  staple  articles,  easily  compared  with  our  own,  the  relative 
cost  of  all  oiher  commodities  could  be  inferred. 

For  such  service  high  attainments  would  be  required  on  the 
part  of  consuls,  which  will  soon  be  secured  under  a  reformed  civil 
service,  and  it  is  greatly  to  be  hoped  that  the  new  administration 
will  give  close  attention  to  this  most  important  subject  and  extend 
the  scope  of  the  work  so  well  begun  by  the  present  Secretary. 

Since  I  cannot  at  present  rewrite  and  thus  avoid  the  repetitions 
which  occur  in  this  volume,  it  may  be  well  to  give  the  following 
condensed  statement  of  each  of  the  several  conclusions  to  which  I 
have  been  led,  and  which  I  have  endeavored  to  present  and  to 
sustain  in  the  different  parts  of  this  treatise. 

ist. — Competition  brings  into  action  the  most  effective  system 
of  co-operation  among  men,  and  in  their  final  results  the  two 
words  may  be  considered  synonymous. 


344  ^-^-^  ^  MAKES 

2d. — By  means  of  competition  the  relative  share  of  the  product 
of  any  given  country  secured  by  capital  is  diminished,  while  the 
share  of  the  laborer  is  increased  both  absolutely  and  relatively. 

3d. — By  means  of  competition  substantial  equality  in  the  con- 
sumption of  the  necessaries  of  life  may  be  attained.  As  time  goes 
on  and  abundance  increases,  the  luxuries  or  comforts  of  one 
generation  become  the  necessities  and  are  enjoyed  by  those  which 
succeed. 

4th. — Wages  are  a  consequence  or  result,  and  are  not  a  measure 
of  the  cost  of  labor.  The  better  the  conditions  under  which  the 
work  is  done,  the  less  the  cost  of  a  given  product  measured  in 
terms  of  labor,  and  the  greater  the  result  or  wage  measured  in 
terms  of  money  or  of  what  money  will  buy. 

5th. — Civilized  man,  living  under  peaceful  conditions,  increases 
the  means  of  subsistence  by  the  application  of  intelligence  and  skill 
to  all  production  in  a  greater  ratio  than  population  tends  to  increase. 

6ih. — Rent  is  a  tribute  rendered  by  valueless  land  in  propor- 
tion to  the  intelligence,  industry,  and  capital  which  may  be 
applied  to  its  cultivation,  use,  or  occupancy. 

yih. — The  burden  of  general  taxation  is  to  be  measured  by  the 
ratio  which  the  sum  of  all  taxes  bears  to  the  net  income  or  savings 
of  the  peoi)le,  rather  than  by  its  ratio  to  the  gross  product. 

8th. — The  burthen  of  a  special  tax  on  any  given  commodity, 
either  foreign  or  domestic,  will  be  severe  or  of  little  moment,  ac- 
cording to  the  subject  on  which  it  is  imposed.  When  placed  upon 
an  article  which  enters  into  the  processes  of  domestic  industry,  it 
becomes  a  great  obstruction  ;  when  placed  upon  an  article  of  vol- 
untary use  ready  for  final  consumption,  the  burden  may  be  small 
even  though  the  revenue  be  large,  and  it  is  then  in  exact  propor- 
tion to  the  amount  of  the  tax. 

9ih. — Capital  is  a  force  to  be  applied  rather  than  a  substance 
to  be  divided.  It  employs  labor  and  is  employed  by  it — both 
co-operating  of  necessity,  and  not  from  choice.  It  follows  that 
the  dollars  of  the  fortunes  gained  in  wholesome  pursuits  are  the 
measure  of  the  services  which  the  owners  have  rendered  to  society. 


THE  RATE   OF  WAGES t  345 

loth. — No  acts  of  legal  tender  can  make  two  metals  circulate 
permanently  at  equal  values,  no  matter  what  adjustments  in  the 
weight  of  coins  may  be  made  from  time  to  time.  If  domestic 
commerce  were  not  subject  to  an  act  of  legal  tender,  it  would  be 
conducted  on  the  same  basis  as  that  on  which  foreign  commerce 
is  now  carried  on — namely,  by  the  standard  of  a  given  weight 
of  gold. 

nth. — The  general  rate  of  wages  which  can  be  paid  in  money 
is  made  or  determined  by  the  sum  of  money  for  which  the  general 
product  can  be  sold  ;  the  less  obstruction  there  is  to  commerce, 
either  domestic  or  foreign,  the  more  the  general  product  will 
bring,  the  higher  the  rate  of  wages  will  be  and  the  greater  the  pur- 
chasing power  of  each  unit  of  the  wages.  Within  this  limit  the  rate 
of  wages  of  each  individual  is  made  by  himself,  and  is  in  the  exact 
ratio  of  the  service  which  he  is  capable  of  rendering  to  others  ;  it 
depends  upon  character,  capacity,  and  industry. 

i2th. — Insufficient  as  the  product  of  the  United  States  is  com- 
pared to  what  it  might  be,  yet  being  the  result  of  the  cheapest 
and  most  effective  application  of  labor  and  capital  yet  attained, 
and  being  also  most  free  from  the  burden  of  destructive  taxation, 
it  yields  to  skill  and  intelligence  the  highest  rates  of  wages  and 
the  most  adequate  profits  as  the  necessary  result  of  low  cost  of  pro- 
duction. 

Some  exceptions  have  been  taken  to  the  propositions  submitted 
in  this  treatise,  while  the  value  of  the  statistics  has  been 
accepted. 

It  has  been  said,  in  one  of  the  most  carefully  written  criticisms, 
that  the  so-called  law  of  population  propounded  by  Malthus  has 
been  ignored  but  not  disproved.  Upon  this  point  no  argument 
will  be  made  ;  the  purpose  of  the  treatise  is  to  present  facts  and 
to  try  to  comprehend  their  meaning.  It  appears  to  be  a  fact,  that 
in  this  country  and  in  England,  during  the  present  century, 
laborers,  as  a  class,  have  gained  an  increasing  share  of  an  in- 
creasing product ;  whether  such  product  be  considered  in  ratio 
to  the  capital  or  to  the  number  of  laborers  engaged  upon  it.     If 


34^  tVHA  T  MAKES 

this  be  true,  then  the  so-called  law  of  population  of  Malthus,  and 
the  hypothesis  that  population  tends  to  increase  faster  than 
the  means  of  subsistence,  are  either  disproved,  or  else  have  been 
subject  to  an  exception  or  variation  in  these  two  countries,  lasting 
through  the  whole  period  since  the  so-called  law  was  first  pro- 
pounded. 

It  has  also  been  held  that  in  the  distribution  of  products, 
whatever  the  annual  product  may  be,  the  writer  has  left  no  place 
for  rent.  It  will  probably  add  to  the  doubt  of  the  capacity  of  the 
writer  to  deal  with  any  thing  but  statistics,  if  he  expresses  a  doubt 
of  the  existence  of  rent  in  the  sense  in  which  that  word  is  used  by 
Ricardo  and  by  the  later  economists  of  the  English  school.  So 
far  as  he  has  been  able  to  comprehend  this  theory,  it  is  based 
mainly  upon  the  varying  properties  of  the  soil,  subject  to  modifi- 
cation according  to  position  and  to  the  facilities  for  marketing  its 
products. 

Are  there  not  other  modifications  or  exceptions  so  numerous  as 
to  destroy  the  apparent  rule  ?  Two  pieces  of  land  of  the  same 
fertility,  and,  in  other  respects,  each  equal  to  the  other,  may  be  so 
treated  that  one  will  yield  a  large  product  above  the  cost  of  pro- 
duction— that  is,  will  yield  rent  ;  while  the  other  will  barely  yield 
the  cost  of  production — that  is,  no  rent. 

Or  the  two  pieces  of  land  will  each  yield  a  large  and  equal 
rent  ;  in  the  one  case,  being  cultivated  with  the  maximum  of 
labor  and  the  minimum  of  capital  ;  in  the  other,  with  the  maximum 
of  capital  and  the  minimum  of  labor. 

In  neither  case  do  the  properties  of  the  soil  constitute  the 
measure  of  the  rent. 

Is  not  the  rent  or  income  which  the  soil  yields  in  the  long  run, 
over  and  above  the  cost  of  production,  chiefly  a  matter  of  mental 
capacity  on  the  part  of  him  who  directs  its  cultivation  rather  than 
of  its  original  properties  or  fertility  ? 

If  such  be  the  case,  the  rents  which  are  attained  by  virtue  of 
mere  possession,  and  which  are  claimed  by  the  landlord  from  the 
tenant,  may  not  be  considered  a  permanent  factor  in  the  dis* 


THE  RATE  OF  WAGES?  347 

tribution  of  products.  The  possession  of  land  in  England  remains 
the  same  as  it  has  been,  but  rents  are  ceasing  to  be  paid,  because 
the  application  of  science  to  the  mechanism  of  distribution  has 
almost  destroyed  the  advantage  of  position  of  English  land. 
Hence,  it  may  happen,  in  the  course  of  time,  that  even  Eng- 
lish land  cannot  be  made  a  source  of  income  or  rent  except 
to  him  who  applies  intelligence  and  capital  directly  to  its  use.  In 
such  case,  land  may  be  held  to  be  of  the  same  nature  as  all  other 
instruments  of  production — that  is,  as  a  laboratory  which  yields 
product  in  the  exact  measure  in  which  capital  and  labor  co- 
operate in  its  cultivation.  In  such  case,  it  may  also  be  asked  how 
rent  will  differ  from  any  other  profit. 

Holding  this  view  of  the  matter,  the  writer  has,  therefore, 
avoided  reference  to  the  customary  terms  used  in  the  distribution 
of  products,  and  has  confined  his  terms  to  two  shares  only, — 
one  share  being  assigned  to  the  increase  of  capital,  the  other  to 
labor. 

But  even  if  the  share  assigned  to  the  increase  of  capital  be 
divided  in  the  customary  way  and  named  in  part  rent,  in  part 
interest,  and  in  part  profit,  the  change  in  name  does  not  alter  the 
general  question. 

Is  it  or  is  it  not  true  that,  as  time  goes  on,  the  absolute  share 
of  the  annual  product  set  aside  for  rent,  interest,  or  profit  increases 
absolutely  while  it  decreases  relatively  ? 

Is  it  or  is  it  not  true  that  the  share  set  aside,  assigned  to,  or 
earned  by  labor,  according  to  the  common  use  of  that  word,  is 
becoming  an  increasing  share  of  an  increasing  product  ;  in  other 
words,  is  the  share  of  the  laborer  increasing  both  absolutely  and 
relatively  ? 

So  far  as  the  data  are  to  be  found,  the  writer  believes  in 
progress /r^/«  poverty,  rather  than  in  the  assumption  of  want  of 
equity  in  the  existing  system  of  distribution,  which  is  implied  in 
the  phrase  "  progress  and  -poveity." 

In  this  treatise  he  has  made  use  of  the  insufficient  data  within 
his  reach,  only  with  the  view  of  giving  a  direction  to  an  investiga- 


348  THE  RATE  OF  WAGES. 

tion  now  admitted  to  be  necessary  to  the  solution  of  these  ques- 
tions. Witness  the  increasing  importance  of,  and  interest  in,  the 
taking  of  the  census,  and  the  establishment  of  National  and  State 
inquiries  as  to  the  conditions  of  labor. 

Is  there,  or  is  there  not,  an  order  in  the  relations  of  men  to  each 
other,  which,  when  reduced  to  terms,  will  constitute  the  elements 
of  Social  Science  ?  If  there  is,  then  the  historical  and  statistical 
method  is  the  only  one  fit  to  be  adopted,  and  the  ^ />r/(?r/ con- 
cepts of  many  of  the  accepted  economic  writers  must  yield  again 
to  the  methods  of  Adam  Smith,  extended  over  the  wider  ground 
which  is  now  open  to  him  who  is  capable  of  occupying  it. 

To  one  who  has  faith,  not  only  in  *'  a  power  that  makes  for 
righteousness,"  but  for  human  welfare  upon  this  earth  as  well, 
the  study  of  these  complex  problems  of  modern  life  may  become 
an  absorbing  pursuit,  no  matter  how  inadequately  he  may  be  able 
to  treat  them. 

In  conclusion,  the  writer  may  venture  to  express  his  gratification 
with  the  fact  that  a  second  edition  of  this  somewhat  disjointed 
series  of  economic  studies  has  been  called  for.  He  may  well  be 
satisfied  with  the  approval  indicated  by  many  letters  from  men  of 
high  position,  as  well  as  of  economists  and  students  of  social 
science  ;  yet  the  greater  satisfaction  has  consisted  in  the  endorse- 
ment of  many  persons,  who,  like  himself,  have  been  compelled  to 
observe  the  relations  of  labor  and  capital,  and  to  study  the  forces 
which  make  the  rate  of  wages,  in  the  conduct  of  practical  affairs 
and  in  the  manufacture  of  goods  of  many  kinds. 

There  may  perhaps  be  no  true  or  final  and  satisfactory  solution 
of  these  complex  problems  until  the  members  of  the  unlearned 
professions  of  the  merchant,  the  manufacturer,  or  the  underwriter 
compile  the  data  from  their  own  practical  experience  for  the  use 
of  the  members  of  the  learned  professions  who  write  the  books 
upon  social  science  or  teach  political  economy  in  the  school  or  in 
the  university.  The  one  may,  perhaps,  perform  the  labor,  while 
the  other  may  furnish  the  mental  capital,  and  from  the  co-opera- 
tion of  the  two  the  best  results  may  be  attained. 

Mrookline^  Feb.  23,  1885.  Edward  Atkinson. 


SUGGESTIONS  TO  STATISTICIANS. 


In  the  progress  of  this  work  the  attention  of  the  writer  has  been 
called  to  the  great  dearth  of  what  may  be  called  comparative  sta- 
tistics, corresponding  to  the  fifty  years'  history  of  cotton  factories 
in  all  departments  :  and  also  to  the  lack  of  consecutive  statements 
of  the  simplest  factors  in  subsistence,  like  the  four  years*  account 
of  the  cost  of  food  for  factory  operatives.  If  there  are  in  print 
statements  corresponding  to  these,  the  writer  would  be  under  a 
great  obligation  to  any  reader  who  would  call  his  attention  .to 
them. 

It  is  by  the  use  of  comparative  statistics  that  the  relative  con- 
ditions of  working  people  may  be  demonstrated,  and  having  ven- 
tured to  suggest  certain  methods  for  rendering  our  consular  re- 
ports more  complete,  a  plan  is  now  submitted  for  comparisons  of 
the  condition  of  laborers  at  home. 

The  customary  method  of  treating  only  the  rates  of  wages  and 
the  prices  of  food,  clothing,  and  rent,  is  inconclusive,  because  the 
proportion  of  each  element  in  the  cost  of  living  varies  so  much  in 
quantity  as  well  as  in  value. 

May  we  not,  however,  establish  a  standard  ration, — a  standard 
supply  of  clothing,  of  fuel,  light,  and  incidentals,  and  of  rent,  for 
certain  specified  classes  of  persons  whose  plane  is  substantially  the 
same  ? 

Working  from  the  ration  of  factory  operatives  as  given  in  this 
treatise  and  from  other  data,  the  expenditure  might  be  calculated 
as  follows  :  of  a  mechanic  in  Massachusetts  earning  $550  to  $600 
per  year,  and  spending  for  the  necessaries  of  life  $500  per  year 
in  supporting  a  wife  and  two  children,  the  latter  counted  as  equal 
to  one  adult — /.  e.,  a  group  of  three  adults  corresponding  in  a  measure 
to  the  working  group  of  three  as  shown  to  exist  by  the  census  : 

349 


350 


fVITA  T  MAKES 


PRO  FORMA. 


Meat,  \  lb.  fresh  to  i  lb.  salt,  per  day,  per  adult  (two 
children  to  one  adult),  g^  cents  each  per  day 

Dairy  products,  \  pint  milk,  i^  oz.  to  2  oz.  butter, 
and  a  scrap  of  cheese  at  a  fraction  under  5  cents 
per  day  per  adult 

Bread,  -J  to  f  lb.  each,  at  a  fraction  over  2\  cents  per 
day  per  adult 

Vegetables,  more  than  one  half  potatoes,  a  little  over 
2  cents  each  per  day  ...... 

Sugar  and  syrup,  a  little  less  than  2  cents  each  per  day 

Tea  and  coffee,  i  cent  each  per  day  . 

Eggs,  -J  cent  each  per  day  .... 

Fruit,  green  and  dry,  \  cent  each  per  day 

Salt,  spice,  ice,  pickles,  etc. ,  -J  cent  each  per  day 


PER  YEAR. 


PER  CENT. 

OF   THE 

WHOLE  COST 

OF  LIVING. 


$100  00 

50  00 

30   00 

25    00 

20  00 

10  00 

5  00 

5  00 

5  00 


Total  food 


.     $250  00 


Fuel  and  light  . 
Incidentals,  soap,  etc. 

Clothing,  35  J^  cotton 
45  %  woollen 
20  %  sundries 

Rent 


Total 


$28  00 
22  00 


20 
10 

6 

5 
4 

2 
I 

I 
I 


50  00 
100  00 

100  00 


$500  00 


50 

10 
20 

20 


ICO  % 


This  table  is  only  an  approximation,  and  may  or  may  not  be  a 
true  standard,  but  it  indicates  how  a  very  accurate  standard  can 
be  established.  It  is  given  as  being  suggestive  if  not  conclusive. 
In  some  sections  the  proportions  of  each  element  would  vary  in 
very  considerable  measure,  and  in  the  same  section  the  propor- 
tions may  vary  in  the  city  and  in  the  country  ;  but  would  it  not 
be  in  the  power  of  the  Chiefs  of  the  State  Bureau  of  Statistics  to 
establish  a  fairly  accurate  standard^  modelled  upon  this  plan,  in 
respect  to  three  classes  of  persons  in  each  State  : 

1.  Common  laborers,  $400  per  year,  income. 

2.  Average  mechanics,  $600  per  year,  income. 

3.  Employes  of  railways  or  the  like  whose  incomes  are  about 


THE  RATE  OF  WAGES f  35I 

fifty  per  cent,  higher    than  those  of  the  average  mechanic,  or 
$900  per  year. 

Each  one  of  these  standards  being  established  in  each  State 
would  serve  as  a  measure  for  comparing  one  State  with  another,! 
and  if  the  average  in  all  States  were  compiled  in  one  average  on 
each  class,  a  standard  would  be  established  for  an  accurate  com- 
parison of  the  condition  of  one  country  as  compared  to  another. 

Again  :  the  relative  per  cent,  or  proportion  of  dollars  in  any 
given  standard,  which  must  be  applied  to  each  separate  item  in 
the  cost  of  subsistence  at  the  present  time,  being  thus  determined, 
a  comparison  could  be  made  of  the  actual  condition  of  laborers  in 
the  same  State  at  a  much  earlier  date.  For  instance,  given  a 
family  of  four  persons  living  upon  the  total  sum  of  the  foregoing 
table,  to  wit,  $500,  it  may  be  assumed  that  the  workman  of  the 
same  class  could  spend  only  two  thirds  of  this  sum  at  some  pre- 
vious date,  say  in  1840. 

Divide  the  two  thirds,  or  $333.33,  in  the  same  proportions  that 
the  present  expenditure  of  $500  is  divided  by.  Apply  these  pro- 
portions to  the  purchase  of  food,  fuel,  clothing,  and  rent  at  the 
prices  of  1840,  and  then  we  have  an  exact  system  for  the  compari- 
son of  conditions  which  do  not  now  exist.  We  should  then  be 
in  the  possession  of  the  data  of  wages,  prices,  and  proportionate 
cost  of  each  of  the  elements  of  subsistence. 

EXAMPLE. 

Suppose  wages  in   1840  to  have  been  two  thirds  the  present 

rate.     The  mechanic  now  spending  $500  per  year  would  then 

have  spent,  say  $340,  in  same  proportions  as  he  now  spends,  to  wit  : 

How  much  would  these  sums  buy 
in  1840  ? 
Meat  20  J^  $68  00  Of  beef. 

**  mutton. 

"  poultry. 

"  salt  pork. 

Dairy  10  jf  3400  "milk. 

"  butter. 

"  cheese. 


352 

WHAT  M. 

4KES 

Bread 

6^ 

20  40 

How  much  would  these  sums  buy 
in  1840? 
Of  flour. 

Vegetables 

5^ 

17  00 

"  potatoes. 

Sugar 

A% 

13   60 

"  sugar. 

Fuel 

6^ 

20  40 

'•  coal. 
*'  wood. 

Clothing 

20J^ 

68  00 

* '  printed  calico. 

"  standard  sheeting. 

'*  16  oz.  cassimere. 

"  4  oz.  merino  or  alpaca. 

"  woollen  hose. 

"  of  boots  or  shoes. 

Rent 

20jr 

68  00 

"  rooms  in  a  good  house. 

Having  determined  quantities  in  1840  and  compared  with  the 
quantities  yielded  now  for  the  higher  wages  earned  with  the  same 
or  less  labor,  we  have  an  absolute  comparison  of  conditions. 

The  customary  comparisons  by  rates  of  wages  and  prices  only, 
fail  to  meet  the  case  because  of  the  varying  proportions  expended 
for  meat,  bread,  sugar,  etc.,  etc.  These  proportions  once  estab- 
lished, relative  conditions  will  be  easily  determined.  In  prepar- 
ing this  treatise  I  have  been  under  the  necessity  of  using  approxi- 
mate estimates,  because  the  historical  and  statistical  basis  for  a 
true  science  of  wages  does  not  yet  exist.  The  real  problem  is  to 
determine  what  the  absolute  wages  in  food,  fuel,  shelter,  and 
clothing  now  are  in  this  country  as  compared  to  others,  rather 
than  to  determine  what  the  comparative  rates  of  wages  in  terms 
of  money  may  be. 

Is  it  true  or  not  that  the  abundant  product  of  this  country 
yields  a  larger  sum  of  money  to  be  divided  among  its  workmen 
than  is  possible  in  any  other  country  ? 

Is  it  true  or  not  that  this  sum  of  money  represents  a  larger  sup- 
ply of  the  necessaries  of  life  for  each  dollar  expended  than  in  any 
other  country  ? 

If  food  is  cheaper  while  clothing  and  shelter  are  dearer,  what 
are  the  reasons  ? 

If,  with  all  our  advantages  of  position,  of  virgin  soil,  and  of 


THE  RATE  OF  WAGES?  353 

freedom  from  vested  wrongs,  the  laborer  cannot  earn  more  and 
get  more  for  his  money  in  this  than  in  any  other  land,  must  we 
not  admit  partial  failure,  and  ought  we  not  to  proceed  at  once  to 
correct  our  methods  ? 

Even  since  I  had  prepared  these  si^gestions  to  statisticians,  by 
the  courtesy  of  Mr.  Joseph  D.  Weeks,  of  Pittsburg,  I  have  been 
supplied  with  the  data  by  which  I  am  enabled  to  make  the  follow- 
ing statement  regarding  the  product  of  a  blast  furnace,  which  has 
been  working  in  the  production  of  pig-iron  for  the  last  twenty-five 
to  thirty  years. 

It  is  alleged  that  progress  and  poverty  are  correlative  terms,  and 
that  as  the  rich  grow  richer,  the  poor  grow  poorer.  This  is  a 
mere  question  of  fact.  Has  it  been  true  of  iron  ?  There  have 
undoubtedly  been  very  profitable  periods  during  the  past  thirty 
years,  when  the  owners  of  ore  beds  and  coal  mines  have  secured 
large  sums  as  rent  or  royalty  from  those  who  have  worked  them. 
There  have  also  been  periods  of  great  profit  in  the  conversion  of 
ores  and  coal  into  iron,  in  which  the  rich  have  grown  richer.  We 
may  not  ask,  nor  expect  to  be  informed,what  these  profits  have  been 
in  specific  cases  ;  but  this  we  know — that  the  greater  the  profit,  the 
more  urgent  the  competition  of  capital  with  capital  in  opening 
new  mines,  constructing  new  furnaces,  and  producing  greater 
quantities  of  metal.  "  Piave  the  poor  become  poorer  ? "  The 
main  question  can  be  conclusively  answered  without  the  disclosure 
of  a  single  fact  of  a  private  nature,  and  without  any  inquisition  to 
which  any  and  every  capitalist  or  owner  might  not  cheerfully  sub- 
mit.    Witness  this  statement  in  regard  to  iron. 

The  two  periods  chosen  for  comparison  are  :  ist.  i860  to  1864, 
inclusive,  five  years  of  war,  paper-money,  inflation,  and  confusion. 
2d.  1875  to  1879,  inclusive,  the  period  of  slow  and  steady  recov* 
ery  from  a  financial  debauch,  in  which  the  solid  and  safe  specie 
standard  of  value  was  restored. 

The  furnace  which  gives  the  data  used  in  this  comparison  is 
one  for  which  all  the  materials  have  been  purchased  at  current 
prices.     The  data,  therefore,  give  the  exact  cost  of  the  labor 


354  WHAT  MAKES 

required  to  convert  the  coal  and  ore  into  iron  after  they  have 
been  delivered. 

The  furnace  is  in  the  eastern  part  of  the  country,  and  is  now  at 
a  relative  disadvantage  in  procuring  material,  as  compared  to 
some  of  the  establishments  m  other  parts  of  the  country,  and  its 
chances  of  continued  success  must  depend  upon  the  owners  over- 
coming this  advantage  by  skill  and  intelligence,  and  by  the  prompt 
adoption  of  easy  improvement  or  labor-saving  invention  ;  that  is 
to  say,  by  the  sagacious  and  skilful  use  of  capital. 

If  we  consider  the  period  from  i860  to  1880  historically,  it  has 
been  one  of  singular  progress  in  improvements  for  converting  ores 
into  iron,  both  in  the  construction  of  furnaces  and  in  the  saving 
of  labor.  To  whom  the  benefits  of  these  inventions  and  improve- 
ments have  enured,  the  table  shows  ;  but  perhaps  it  may  not  be 
amiss  to  bring  the  principal  changes  into  more  conspicuous  con- 
trast, and  to  compare  these  changes  under  the  customary  classifi- 
cations : 

I  St.  The  margin  between  the  selling  price  of  iron  and  the  cost 
of  materials  and  labor  has  decreased  2>:^  yW  P^^^  cent.  The 
share  of  the  capital  has  been  reduced  both  absolutely  and  rela- 
tively. 

2d.  The  labor  has  been  rendered  less  arduous,  while  the  wages 
of  the  laborer  have  been  increased  37  jVtt  P^^  cent.  The  share  of 
the  laborer  has  been  increased  both  absolutely  and  relatively. 

3d.  The  price  of  iron  to  the  consumer  has  been  reduced  31  -^^ 
per  cent. 

The  measure  in  money  of  the  gain  to  laborers  is  $133  each. 
For  five  years*  work  of  seventy-one  men,  $9,433  per  year,  $47,215. 

The  measure  in  money  of  the  gain  to  consumers  in  five  years, 
t  $8.87  per  ton,  is  $76,706. 


THE  RATE   OF  WAGES? 


355 


THE  LAW  OF  PROFITS  DIMINISHED  AND  WAGES  INCREASED  BY  COMPETITION, 
ILLUSTRATED  BY  THE  STATISTICS  OF  AN  IRON  FURNACE  USED  FOR  THE 
CONVERSION  OF  ORES  AND  COAL  PURCHASED  AT  MARKET-PRICES,  INTO 
PIG-IRON.  PERIODS  COMPARED — 1860  TO  I864  (FIVE  YEARS),  1875  TO 
1879  (FIVE  years),    DESIGNATED   RESPECTIVELY   I.    AND  II. 

In-        De- 


•  li! 


X.  Fixed  capital 

9.  Product    of     iron,  j    I. 

tons ni. 

3.  Market  value    per  J    I. 


I.     The  same  in  each  period. 


58,959 

86,546 

S27  95 

ton \\\.       19  08 

(   I.  $1,627,268 

Value  total  product  <  TT        a         o 
I  11.    1,651,298 


5.  Cost  materials  and  J   I.  $1,064,089  «=■ 

labor III.    1,556,889  — 

6.  Per  cent,  cost  ma-  /   j^ 

terials  and  labor-< 
to  value  product '  ^^' 

7.  Margin   for    taxes, 

insurance, cost  of 
selling,  incident- 
als, administra- 
tion, and  profitj  if 
any 

R.  Sum  of  wages    .    A' 

9.  Hands  employed   .  ]  tt' 

xo.  Wages    per    hand  (    I. 
per  year      .    .    .  I II. 


65.39 
94.28 

34.61 
5-72 


l:J: 


XX.  Wages  per  ton 

xa.  Per  cent,  of  wages  j   I. 

to  value.    .    .    .III. 
X3.  Ton    product    perj    I. 

hand III. 


$134,214 
172,491 

76 

71 
$353 

486 
%-i  27 

X  99 

8.25 
X0.44 

776 
1,219 


crease,  crease. 


[46  ?? 


3ii*y?5  % 


•44iVff 


83/A 


«^ 


371^^ 

■55A'» 


This  table  might  well  be  named  "  The  indicator  of  progress' 
from  poverty  of  the  workman  and  progress  toward  poverty  of  the 
capitalist." 

Another  graphical  method  of  showing  these  results  is  submitted, 
as  follows : 


356 


IVHA  T  MAKES 


PIG  IRON. 

Diagram  showing  the  changes  which  have  occurred  in  a  blast  furnace  used  for 
the  conversion  of  iron  ores  and  coal  purchased  at  market-prices  into  pij^-iron. 
The  conditions  of  i860  to  1864  inclusive  are  taken  as  a  standard,  each  being 
called  100,  and  all  represented  by  the  single  point  at  the  head  of  the  column 
on  the  left ;  from  this  point  the  lines  of  variation  diverge,  and  the  several 
points  in  the  column  on  the  right  show  the  resuh  of  these  variations  in  the 
averages  of  product,  prices,  wages,  etc.,  in  1875  to  1879  inclusive. 

5  years: 
1875  to  1879  inclusive. 

Product  per  hand  increased 
from  776  tons  to  1,219  tons. 

Total  product  increased  from 
58,959  tons  to  86,546  tons. 

Wages  increased  from  $353 
per  year  in  a  depreciating 
currency  to  $486  per  year  in 
an  appreciating  currency. 


Gross  value  of  total  product 
increased  from  §  1,627, 268  'o 
$1,651,298. 

Number  of  hands  employed 
decreased  from  76  to  71. 


Price  of  iron  decreased  from 
$27.95  to  $19.18  per  ton. 


Margin  between  the  value  of 
the  product  and  the  cost 
of  materials  and  labor,  from 
which  margin  taxes,  general 
expenses,  and  profits  are  to 
be  derived,  decreased  from 
$9. 55  per  ton  to  $  i  .09  per  ton. 


THE  RATE  OF  WAGES?  357 

It  will  be  apparent  that  while  the  profits  of  capital  may  have 
been  much  more  than  ten  per  cent,  in  the  first  period,  and  must 
have  been  much  less,  if  any  thing,  in  the  second  ;  yet  such  facts 
can  seldom  be  correctly  ascertained,  and  if  given,  would  not  be  as 
useful  as  to  assume  a  certain  uniform  rate  of  profit.  It  is  an 
absolute  rule  that  if  profits  rise  above  a  certain  rate  in  any  art 
which  is  open  to  free  competition,  capital  will  be  immediately 
applied  thereto  in  ample  measure  so  as  to  bring  them  down  to  an 
average  at  any  given  time.  If  an  excess  of  profit  is  gained  for  any 
considerable  period,  an  excess  of  capital  will  be  invested,  and 
presently  what  is  commonly  called  an  over-production  will  occur. 

The  iron  industry  has  been  peculiarly  liable  to  excessive 
fluctuations,  owing  to  the  great  fluctuations  in  the  construction  of 
railways,  for  which  so  large  a  part  of  the  product  of  iron  and  steel 
is  used. 

The  attention  of  statisticians  is  called  to  the  simplicity  of  this 
form.  It  is  merely  a  digest  of  the  customary  annual  statements 
which  are  made  up  by  all  well-conducted  corporations  or  co- 
partnerships, and  any  competent  accountant  could  fill  up  the 
blanks  for  any  year  or  series  of  years.  It  will  be  observed  that 
the  facts  given  disclose  the  progress  of  the  workmen,  and  the 
benefit  of  reduction  of  price  to  consumers  ;  but  do  not  disclose 
the  profits  of  the  business  in  such  a  way  as  to  be  objectionable  to 
owners  of  works  or  factories.  The  diminishing  margin  between 
the  gross  market  value  of  the  goods  and  the  combined  cost  of 
materials  and  labor  will  yet  sustain  the  rule  that  the  profit  of 
manufacturing,  of  metal  work,  of  transportation,  and  in  fact  in  all 
the  arts  of  life,  now  consists  in  economy  of  administration  and  in 
saving  small  fractions  in  transportation,  in  the  cost  of  selling,  in 
insurance,  taxes,  and  all  the  other  expenses  which  of  necessity 
intervene  between  the  primary  work  of  production  and  the  final 
consumption  of  all  products. 

In  fact  all  profit  now  consists  in  saving  what  was  once  wasted. 

It  will  be  apparent  to  all  statisticians  that  if  we  can  establish 
the   standard  ration,  the   standard   supply  of  clothing,  and  the 


358  WHAT  MAKES 

Standard  price  of  shelter  in  the  way  previously  suggested,  and 
also  secure  tables  similar  to  the  analyses  of  cotton  fabrics  and  of 
pig-iron,  the  actual  progress  of  working  people  may  be  abso- 
lutely demonstrated. 

It  is  the  purpose  of  the  writer  to  attempt  to  procure  such  data 
in  respect  to  boots  and  shoes,  hats,  paper,  cordage,  pine  lumber, 
rolled  iron,  locomotive  engines,  and  many  other  productions  of 
which  the  accounts  have  probably  been  kept  in  a  uniform  way, 
and  for  this  purpose  he  will  be  grateful  for  any  aid  which  may  be 
rendered. 

This  is  a  difficult  and  uncertain  task  for  an  unofficial  person  to 
undertake,  but  even  if  imperfectly  carried  out  it  may  yet  establish 
a  method  which  will  ultimately  lead  to  exact  conclusions. 

Finally,  in  order  that  all  such  facts  bearing  upon  the  question 
"  What  makes  the  Rate  of  Wages  ?  "  may  be  brought  together  for 
comparison  and  discussion,  the  writer  invites  communications,  to 
be  submitted  at  the  meeting  of  the  American  Association  for  the 
Advancement  of  Science,  in  August,  in  the  section  devoted  to 
political  economy  and  statistics,  of  which  he  has  the  honor  to  be 
chairman.  Communications  from  foreign  countries  will  be  grate- 
fully received. 

Any  persons  who  are  desirous  to  take  part  in  the  collection  of 
such  facts,  or  who  will  furnish  the  writer  with  the  requisite  data, 
may  address  him  at  No.  31  Milk  Street,  Boston,  Mass.,  U.  S.  A. 

Edward  Atkinson. 
Boston,  March  30,  1885. 


THE  RATE   OF   WAGES?  359 


FORM    OF    INTERROGATORIES,  BY  MEANS   OF   WHICH  THE   PRICE   OF 

LABOR 1.  E.,  THE   RATE  OF   WAGES,  AND  THE  COST  OF  LABOR 

— I.  E.,  THE  SUM  OF  WAGES  IN  A  GIVEN  PRODUCT,  MAY  BE 
ASCERTAINED. 

1 .  What  was  a  fair  valuation  of  your*  real  estate  and  machinery 

at  the  earliest  date  from  which  you  can  make  a  consecutive 
statement  of  your  business  ? 

2.  Beginning  at  this  date,  what  was  the  apnual  product  in  units, 

such  as  pounds  of  cloth,  tons  of  rails,  pairs  of  boots,  etc.  ? 

3.  For  each  year  separately  to  1884,  inclusive.      Or  for  periods  of 

five  years,  wide  apart  ;  say,  1856  to  i860,  1866  to  1870,  1879 
to  1883 — the  year  1884  separately  ? 

4.  What  was  the  market-price  in  each  year  of  some  specific  unit 

which  has  been  made  of  the  same  kind  and  same  quality,  or 
better,  throughout  the  term  ? 

5.  What  was  the  gross  value  of  the  total  product  each  year  or 

each  period  of  five  years  ? 

6.  What  was  the  cost  of  materials  and  labor  combined  in  each  year 

or  period,  omitting  insurance,  taxes,  and  general  expenses, 
and  including  as  labor — overseers  second  hands,  operators, 
mechanics,  engineers,  firemen,  and  laborers,  but  not  including 
superintendent  or  clerk  ? 

7.  What  was  the  sum  paid  for  labor  as  above  defined  in  each  year 

or  period  ? 

8.  What  was  the  average  number  of  laborers  in  each  year  or  each 

period  ? 
Consecutive  statements  from  the  earliest  date  to  1884,  each  year 
separately,  preferred. 

Financial  years  may  be  given  in  place  of  calendar  years. 


STANDARD  COTTON  SHEETINGS. 

The  general  tendency  of  wages  toward  a  maximum  and  of  profits  to  a  minimum  is 
shown  by  these  diverging  lines.  There  have  been,  of  course,  great  fluctuations 
but  it  will  be  observed  that  even  the  reduction  in  the  rate  of  wages  in  money, 
between  1883  and  1885,  was  accompanied  by  an  increase  in  the  purchasing  power 
of  money,  so  that  wages  measured  in  sheetings  are  now  higher  than  ever  before. 
I  believe  this  is  also  true  if  wages  are  measured  in  food  or  woollens.  In  other 
words,  all  who  are  employed  at  all  can  get  more  for  their  work  than  ever  before 
in  food,  clothing,  and  shelter. 

1840  i¥3  ^85 

r 

208  per  cent,  increased  effi- 
ciency of  1 1  )or  p^rowinp  out 
of  improvi;rnents  in  capital, 
— /.  e.,  machinery. 


186    per   cent, 
machinery. 


increase    of 


122  per  cent,  increased  value 

or  products. 
ii4i    per     cent,    increase    of 

\vages  measured  in  standard 

sheetings. 


J  per  cent,  increased  w-i^es, 
per  hour,  measured  in 
money. 


54^%  increased  wages   meas- 
ured in  money. 


gj  per  cent,  increased  num- 
ber of  operatives  required 
for  186  per  cent,  increase  of 
machinery. 


17105  decrease  in   hours  per 

day. 
28  per  cent,  decrease  in  price 

of  cloth. 


70  per  cent,  decrease  in  pro- 

Eortion  of  products  secured 
y  capital  in  yarJs. 
80  per  cent,  decrease  in  pro- 
portion of  productsassigned 
to  profit  at    10   per   cent., 
1840  and  1883,  and  at  6  per 


INDEX. 


Agriculture  in  United  States,  28,  320, 
321 

American  Association  for  Advance- 
ment of  Science,  358 

Annual  products,  30,  331 

Appendices  to  "Rate  of  Wages": 
I.,  91;  II.,  118;  III.,  127;  IV., 
129;  v.,  139;  VI.,  158;  VII.,  171 

Appendices  to  "  Railroad,  Farmer,  and 
Public":  I.,  291  ;  II.,  298 

Arkwright,  79 

Armies  of  Europe,  73 

Austria,  16 

Bagehot,  Walter,  quotation  from,  185 
Balance  of  trade,  201 
Banks  and  banking,  193 

"      and  manufactures,  217 

"      State,  222 
Banking,  elements  of,  211 
Bastiat,  Frederick,  proposition  from, 

23.  89 
Beef  for  prisoners,  163 
Beets,  47 

Bessemer,  Sir  Henry,  84 
Bi-metallic  theory,  200 
Bismarck,  13,  16 
Blackburn,  343 
Blanchard,  G.  R.,  240 
Boarding,  cost  of,  158,  163 
Bonanza  farms,  76 
Brassey,  60 
Bread,  75,  167 


Bread,  analysis  of  loaf  of,  291 
Bremen  steamer,  incident  of,  60 
Buckle,  67 

Bureau  of  Statistics,  350 
Burdens  of  Europe  and  America  com- 
pared, 284 

Cairnes'  theory  of  wages,  25 

Capital,  25,  188 

Carey,  Henry  C,  theory  of  rent,  340 

Cash,  208 

Census  of  United  States,  31,  96 

**       Office  Reports,  140 

"       of  Massachusetts,  92 
China  and  India,  69 
Cincinnati  riots,  270 
Cities,  growth  of,  151 

"       want  in,  America  and  Europe 

compared,  336 
Cities,  tendency  of  poor  to  collect  in, 

336 
Clothing  of  various  classes,  165 
Coal,  78 

Coinage  of  silver  dollars,  315 
Commercial  crises,  314 
Competition,  35 

"  in  wages,  12 

Conclusions  on   wage  question,    178, 

343 
Congress,  present,  187 
Consuls,  instructions  to,  343 
Consumption  defined,  199 

"  in  United  States,  318 


361 


36: 


JAWEX. 


Cotton  manufacture,  48,  50,  52,  68 

"      workers,  42 
Corn  meal,  161 
Cost  of  living,  338 

Crops,  amount  of  land  needed  for,  335 
Cunningham,  W.,  189 

Dairy  products,  156 

Dakota,  14 

Depression,  present,  314 

Distribution,  9,  346 

Dodge,  J.  R.,  investigations  and  dia- 
grams of,  139,  143 

Dollars,  standard  of  gold,  319 

Duties,  323 

Election,  result  of,  181 

Employes  in  manufactures,  log 
"         on  farms,  ill,  320 

Employment,  lack  of,  313 

Engel,  Dr.,  investigations  of,  134,  166, 
169 

England,  16,  347 

English  commerce,  82 
"       wealth,  136 

Exchange,  benefit  of,  20,  55 
"  result  of,  37 

Factories,  increase  of,  313 
"         cessation,  313 
"         operatives,  actual  consump- 
tion of,  318 
Factory  boarding-house  in  Massachu- 
setts, 163 
Factory  boarding-house  in  Maryland, 

158 
Fallacies,  popular,  26,  58,  62 

"         counter  propositions  to,  63 
Fare,  prisoners',  163 
"     laborers',  164 
Farmers,  dependent  on  foreign  mar- 
ket, 305 


Fibres,  amount  transported  on  rail- 
roads, 309 

Flour  of  the  West,  75 

Food  and  clothing,  317 

Food  of  workmen  and  prisoners  com- 
pared, 169, 

Form  of  questions,  359 

Formula  of  production,  48 

Frelinghuysen's  report,  342 

Fuel,  amount  transported  by  railways 
per  year,  309 

Fundamental  law  of  labor,  94 


Germany,  16,  17,  343 
German  army,  i8 

"        steamer,  incident  of,  61 
George,  Henry,  9,  12,  331 
Giffen,  Robert,  71,  83 
Glasgow,  343 
Government,  proposed   regulation   of 

railroads  by,  305 
Grain,  22,  232,  235,  309 

"       crops,  table  of,  233 
Great  Britain,  land  question  in,  227 
"  and  her  manufactures, 

133 
Greenback  fallacies,  26 

"Harmonies  of  Political  Economy," 

23 
Hen  industry,  155 
Homespun  fabric,  125 
Hooper,  W.  E.  &  Sons,  158 
Howe  Bakery,  291 
Howe,  Samuel,  286 


Industry,  diversified,  153 

Irish  Land  Acts,  13 

Iron,  77,  84,  156,  269,  318,  353»  356 

Iron  and  Steel  Association,  240 


INDEX. 


3^3 


Kidder,  Peabody,  &  Co.,  211 

Laborers,  21,  44,  313,  315 

Land  and  labor,  need  of  capital  for, 

336 
Land  under  national  ownership,  332 
Law  of  competition,  118 

"       exchange,  197 
Legal-tender  Acts,  197,  305 

"  United  States  notes,  221 

Louisiana  purchase,  203 

Machinery  and  agriculture,  99 

"  effect  of,  in  manufacture, 

35. 

Malthus,  15,  22,  339,  345 

M auger  &  Avery,  240 

Mansfield,  Judge,  4 

Manufactures,  mechanics,  and  mining, 
306 

Memorial  Hall,  system  of,  164 

Metals,   amount    transported  on  rail- 
ways, 309 

Metaphysics  of  exchange,  189 

Mexican  dollars,  202 

Middle  States,  manufacture  and  com- 
merce of,  306 

Mid-Lothian,  343 

Miners,  329 

Minnesota,  15 

Money,  26 

"       definition  of,  28,  194,  220 
"       false  and  true,  207,  211,  221, 
223 

Money,  fiat,  4,  135,  194 
"       paper,  227 

Montana,  improvement  of,  22 

National  Bank,  205 

"  "      work  of,  216 

"         Legislature,  287 


National  revenue,  collection  of,   305, 

320 
Necessities  of  life,  exchange  of,  312 
Newcastle,  343 

New  England,  manufactures  of,  306 
Nimmo,  Joseph,  Jr.,   report  of,   139, 

341 
North  Carolina  and  New  England,  68 
Nutritious  food,  164 

Occupations,  104,  106,  305,  320 

"  summary  of,  149,  310 

Ohio,  147,  325 
Oldham,  343 
Oregon,  152 
Over-production,  55,  182 

Parsons,  Judge,  4 

People  of  United  States,  expenditures, 

337 
Pepper,  202 
Persons   engaged   in    production    and 

distribution,  277 
Persons  affected  by  foreign  markets, 

322 
Phillips,  Wendell,  12 
"Pillar"  dollars,  202 
Political  economy,  French  system  of, 

23 
"  Poor's  Railway  Manual,"  240,  341 
Population  of  globe,  22 

United  States,   26,  28, 

315 
President  of  United  States,  result  of 

choice,  181 
Product,  annual,  in  United  States,  26, 

95.  353 
Product,  division  of,  70 
Production  defined,  9,  10 
Products,  tables  of,  156,  317,  327 
Professionals,  305 


3^4 


INDEX. 


Profits  of  capital,  357 
*'  Progress  and  Poverty,"  9 
Progress  in  working  iron,  354 
"      of  United  States,  83 
Protection  of  domestic  industry,  320 

Railroads,  27,  268 

"  adjustment     of     value    of 

stock,  263 
Railroads,  capital,   relation   to   farms 

and  factories,  256 
Railroads,  change  wrought  by,  231 
"  charges,  292 

"  "        effect   on   cost   of 

meat,  295 
Railroads,    construction   of,   43,    185, 

3^5. 
Railroads,  diagrams,  274 

"  Farmer,   and  Public,   loi, 

.    175.  231 

Railroads,  freight  charges,  235,  252 
"  local  traffic,  252,  306 

"  New  York  Central,  75 

"  mileage,  240,  252,  257,  316 

'*  government       regulations, 

294 
Railroads  in  Ohio,  148,  261 
Railroads  unnecessary,  260 

"         watered  stock  of,  239 
Railway  Manual,  Poor's,  237 
"        lands,  large  sale  of,  314 
"       officials  and  laborers,  107,  313 
"        panics,  1S5 

'*  "       and    commercial   pa- 

ralysis, 254 
Railway  rates  higher  with  small  traffic, 

309 
Railway  service,  extension  of,  99,  305 

"  system,  99 
Raw  material,  323 
Reconstruction,  182 


Reign  of  terror,  16 

Religious  dogma,  19 

Rent,  formulas  of,  340 

Reports   of   Railway   Commissioners, 

341 
Resources  of  United  States,  74 
Resumption  Act,  226,  233 
Ricardian  theory  of  rent,  340 
Rogers,  J.  E.  Thorold,  189 
Russia  and  nihilism,  16 

Sabine,  H.,  240 
Science,  advancement,  21 
Ship-building  on  the  Delaware,  330 
Silver  Act,  154,  305 

"      compared  with  other  products, 

318 
Silver  dollars,  uncertain  standard  of 

value,  316 
Slaier,  Samuel,  80 
Slavery,  abolition  of,  99 
Smiih,  Adam,  348 
Southern  States,  agriculture  of,  306 
Speculation,  225 
Spinning-jenny,  84 
Standing  army,  281 
Statisticians,  suggestions  to,  349 
State  banks,  222 
Suez  Canal,  19 
Sugar,  161 
Summary  of  wealth  in  United  States, 

117 
Surplus  revenue  in  United  States,  57 
Tables  : 

Average  work  and  wages,  118-121, 
127 

Averages  of  wages,  129 

Consumption  of  food,  159,  160,  162, 
163,  165,  171,  172,  175,  350,  351 

Grain  crops  in  United  States,  233, 
296 


INDEX. 


365 


Law  of  profits,  355 

Occupations,   I49-I53.  305,  3io  et 

seq.y  325.  326,  328 
Only  approximately  accurate,  313 
Products,  157 
Products,    value    of,    compared    to 

manufactures,  140 
Railway  charges,  293 

"         construction,  274 

"         employes,  277 
Railways,  farms,  and  manufactures 

compared,  256 
Railroad   mileage,    234,    241,    242, 

244-252 
Railway  traffic,  148 
Railways,  tons  moved  by,  262 
Relative  burdens  of  Europeans  and 

Americans,  284 
Relative  taxation,  154 

Tariff,  82,  325 

Taxes,  29,  33,  99,  180,  324 

"     difference  between,  on  raw  ma- 
terial and   finished  products,   323, 

324 
Temple,  Sir  Richard,  74 
Theories  of  wages :  Thornton,  Caimes, 

Walker,  24 
Timber,  amount  transported  by  rail, 

309 
Trade  and  transportation,  306 
Traffic,  relation  of  volume  to  rate  of 

charge,  307 

Unemployed,  work  for  the,  279 


United  States,  land  in,  332 

United  States,  area  of,  334 

"  resources  of,  74,  334 

"  Supreme  Court  of,  4 

Value  of  manufactured  goods,  165 
Vanderbilt,  Cornelius,  38 
Vegetable  food,  161 
Vienna  under  martial  law,  16 


Wages,  rate  of,  9,  341 
"       subdivision  of,  39 
**       question,  62 
"       word  defined,  70 
"       high  rate  of,  in  United  States, 

74 
Wages,  statistics,  130 

"       theory  of,  24 
Walker,  E.  H.,  240,  341 

"        Francis  A.,  24 
War,  dangers  of  modern,  19 

*'     versus  work,  72 
Wealth  of  United  States,  31,  96 

•*      secret  of,  136 
Weeks,  Joseph  D.,  353 
Western  States,  grain  in,  306 
Wheat,  14,  296 
Williams,  consul  at  Rouen,  report  of, 

343 
Wool,  156,  266,  326 
Wright,  Carroll  D.,  129,  166,  169,  341 


Yorkshire,  343 


if^S^  OF  thb"^ 

UHI7BESIT7] 


RETURN       CIRCULATION  DEPARTMENT 
TObbi^       202  Main  Library 


LOAN  PERIOD  1 
HOME  USE 

2 

3 

4 

5 

6 

ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 

1-month  loons  may  be  renewed  by  calling  642-3405 

6-month  loons  may  be  recharged  by  bringing  books  to  Circulation  Desk 

Renewals  and  recharges  may  be  mode  4  days  prior  to  due  date 


DUE 

AS  STAMPED  BELOW 

SErm      

'  V  -  •  7  / 

OCT    P.ID        JIJM  1  9    t9f 

"     *'W»8  J982 

1 

BRR   i*m          im  1  ^  7s5 

<^ 

ppp  1  9  1979. 

nfP.AT^^S^ 

NOV  17  1979 

*25«B5    1 

i#- 

RECEIVED  BY 

OCT  I  2  1984 

.c 

IRCULATION  DFPT 

W0M'28^^°^ 

'Uaa  N0!lV^r'O>!D 

'"'■'"■'    -   -    ' "/ 

.,  .•  I  ,•--/,■■       _    1 

FORM  NO.  DD  6,  40m  10 '77 


UNIVERSITY  OF  CALIFORNIA,  BERKELEY 
BERKELEY,  CA  94720 


<^0S715ist^ 


H£,77l 
'4S 


S/ay^ 


